Bonds Continue To Rally

[JEast]

What a difference only few trading days make.  Since the end of the reported June 30 numbers, the 10-year has moved 100-110bp.  Huge move in a such a short period.  Some have speculated what this implies, but here is a call for our friends in the front office to sell a good portion of those long-dated bonds -- with the proceeds, do what you do best.

All this good news even prior to heading into the peak hurricane season.

As events play out, it would seem that our company is hitting on most, if not all, cylinders.  On any general market pullback, FFH my even get back to extremely undervalued that the market is missing or doesn't care about short-term.

-- Prem & Team, buy back a few shares


Cheers
JEast 

[tombgrt]

sub 2%. 

[Santayana]

Prem has said he thinks US debt is good for the long term.  Does anyone think he'll be taking profits at these levels? 

[bluedevil]

I think HWIC will sell when the yield on the 30 yr treasury goes below 3%.  That is when he sold in 2008 and factors in the low levels of inflation HWIC expects in medium-term future.

[JEast]

Given the move in the past few days and from the December 31 numbers, the 10-year has moved 75-85bp and the 30-year has moved nearly 120bp.  Huge moves for the year but significant moves from the June 30 when we were in a mark-to-market loss.

Another call for our friends in the front office to sell a good portion of those long-dated bonds -- and with the proceeds, do what you do best.


Cheers
JEast

[Uccmal]

James, I am not convinced they will sell anything.  There is a degree of re-investment risk.  This capital has to stay liquid so they would have to move the long bonds to the short end.  Anyway, we shall see in a few weeks what they are doing.  Al.

[JEast]

As we gather steam back to the bond September lows, let’s see if the FFH team finally sells some of those long dated bonds.  From the 3rd quarter report it would appear that they had not.

I am sure HW sees good equity values currently that we could surely exchange.  Given the opportunity for another 25% gain on bonds (some would argue) versus 10%+ earnings yield (plus dividends) seems like an easy exchange.  Some bond gains for more equity positions is requested.  If the birds chirp more, let’s give them a little in the next few weeks


Cheers
JEast

[Viking]

There look to be lots of cross currents currently swirling around:
1.) year end window dressing by funds
2.) low volume due to Christmas holidays
3.) year end tax loss selling

Bonds again are at multi-year lows and stocks continue sideways... I wonder if Europe is burning people out, given all the noise since Sept and lack of progress. Perhaps time for the patient to receive a little shock therapy (complements of our hedge fund friends)... 

[sdev]

I think dumping treasuries for equities on a large scale is not an option. Insurance regulators and ratings agencies would freak out. However I bet that if there were seemingly undervalued bonds that had adequate guaranteessuch as munis in 08 or munis they tried to buy within the last year but received no fills, they would swap out their treasuries.

[petec]

I hope they sell some.   I understand their deflation thesis but the derivatives give them great protection there.   There's no need to hold the bonds and you'd have to be out of your mind to say they have a margin of safety (vs. the other reason for holding them, which is a macro bet on deflation).

Go to cash and wait for opportunities.