Best of the Bond Market for October 19th, 2012
Pascal-Emmanuel Gobry: No, The United States Will Not Go Into A Debt Crisis, Not Now, Not Ever – because we live in a fiat currency system, where the United States government can create an infinite number of dollars at no cost to meet its obligations. A Treasury bill is a promise that the government will give you US dollars–something that the United States government can produce infinitely and at no cost.
SacBee: – San Bernardino stops pension payments and owes pension fund $5.3 million. – The city of San Bernardino has stopped making its required payments to CalPERS since filing for bankruptcy and owes the big pension fund $5.3 million, CalPERS said today.
Cate Long: – California State Treasurer seeks revenge on Wall Street rip-off artists. – I wish that I knew how to put on a conference, because we need a muniland event with Bill Lockyer, California’s state treasurer, as the headliner. I would invite all the state treasurers and attorneys general to learn how state officials can wield their power to protect local governments from unscrupulous underwriters, bond counsels and financial advisors.
CFA Institute: No Bubble in High Yield Bonds – Why the 4 main arguments that junk bonds are in a bubble don’t hold up.
Bloomberg: – Muni defaults falling to 3-year low prove Whitney wrong. – Defaults in the $3.7 trillion U.S. municipal-bond market are poised to fall below 100 this year for the first time since at least 2009, driven by a drop in failures among real-estate borrowings in Florida.
Bloomberg: – Bond sales double in US with spreads tightest in 17 months. – Sales of corporate bonds in the U.S. doubled this week as relative yields narrowed to the tightest level in more than 17 months.
Lord Abbott: – Eight ways the muni market is changing. – While recent developments have highlighted the relative value and historical stability of municipal securities, there have been changes that also underscore the challenges that individual investors might face from navigating the market on their own.
Reuters: – Presidential tax plans bad news for munis. – Tax policies proposed by the two presidential candidates may differ in several ways, but both could roil the $3.7 trillion U.S. municipal bond market, popular with wealthy investors and vital for the financing needs of states, cities and other issuers of tax-exempt debt.
MoneyWeek: – Are US Treasuries a good place to be right now? – Even if the US 10-year Treasury bond yield was to fall to 0%, the price of the bond would only rise by 17%. That’s not much upside for a bet on a very extreme, “end of the world”, scenario.
Reuters: – US muni bond funds report $620.8 mln inflows. – U.S. municipal bond funds reported $620.8 million of net inflows in the week ended Oct. 17, down from $914.6 million of inflows during the previous week, according to data released by Lipper on Thursday.
ETF Daily: – Credit ratings now irrelevant to bond markets. – In our fraud-ridden markets, trivialities like economic fundamentals are no longer a factor in pricing markets. Rather, instead of “fundamentals” we now have patterns of manipulation: the direction in which markets are being pushed/pulled by the Western financial crime syndicate.
Yahoo Finance: – Nine states with sinking pensions. – Several years after the financial crisis of 2008, state pension funds continue to languish. According to data released this week, there was a $859 billion gap between the obligations of the country’s 100 largest public pension plans and the funding of these pensions. So which states are the biggest culprits?
Learn Bonds: – 5 bond funds everyone should consider. – Have you considered moving money from bond funds into stock funds? Wait. This idea is appealing when bond yields are low and the stock market is doing well. However, we own bonds for when the stock market isn’t doing well. So let’s dissect two of the more common arguments for putting your whole portfolio into stocks.
Reuters: – Was QE3 really necessary? – Given that treasuries are rising and we’re starting to see evidence of a nice third-quarter rebound. Some traders have been speculating that the Fed may modify its guidance on how long it will hold rates near zero when it meets next week.