Not As Stupid As I Look

I bought about $100K worth of callable Fannie Mae bonds yesterday morning, with an average annualized yield to worst of about 6.6%. And today?

NEW YORK (CNNMoney.com) -- Bonds rose sharply Thursday as homebuilders reported weak earnings and a durable orders report came in lower than expected.

The 10-year jumped 25/32, or $7.81 on a $1,000 note, to yield 4.80 percent, down from 4.90 percent Wednesday. The 30-year bond climbed 1-3/32, or $10.94 on a $1,000 note, to yield 4.95 percent, down from 5.02 percent. Bond prices and yields move in opposite directions.

The 5-year gained 21/32 to yield 4.62 percent. While the 2-year rose 9/32 to yield 4.57 percent.

My reason was that I saw a lot of hints that in spite of the Fed's nervousness about inflation, the economy is running out of steam. Actually, the housing part of the economy is running out of steam, while other parts did not seem to be--but that durable orders report indicates that other parts of the economy are beginning to follow. (No surprise: a lot of the durable goods purchased ended up going into new houses, or getting purchased with home equity loans--which is stupid.)

The other hint is that I am seeing a lot of car companies offering zero percent loans. These are usually relatively short duration (two to three years), but often this shows that automobile demand is down and the car companies expect interest rates to be low enough over the next few years that they can afford to make these zero percent loans, because it isn't going to cost them much to finance cars at these low rates.

I just wish that I had been really smart, and bought another $100K worth of bonds at the same time!