WSJ: – Fed extends bond buying into 2013. – The Federal Reserve refashioned its bond-buying programs on Wednesday, extending its far-reaching effort to revitalize the jobs market and boost the economic recovery into 2013.
Business Insider: A historic change in monetary policy– There has been a huge, historic monetary policy statement from the Fed. The Fed is now linking future monetary policy moves to hard economic thresholds on unemployment and inflation.
Aleph Blog: Redacted Version of the December 2012 FOMC Statement – A side by side comparison in the changes between the Oct. 2012 and today’s fed statement.
WSJ: – Tax breaks on muni bonds draw scrutiny. – A rare area of potential agreement between the White House and Republicans in the fiscal-cliff debate could come as a surprise to many investors: Both sides are willing to consider taxing at least a portion of municipal-bond interest paid to higher-income households.
Self Evident: – A defense of the tax exemption for municipal bonds. – Most recent tax reform proposals have focused on eliminating or radically transforming the federal government’s tax expenditures, which could have a negative impact on the municipal bond market. Here, I explain how popular attitudes toward tax reform are based on a facile understanding of tax expenditures, and why there is not a market for the substitutes for tax-exempt municipal bonds that lawmakers have proposed.
Learn Bonds: – Why are Bill Gross’s number 1 picks not part of his total return fund? – While the PIMCO Total Return Fund and Bill Gross are synonymous in most investor minds, it is important to remember that the fund has limitations from which Bill Gross cannot deviate. Primarily it is a bond fund, which means that it cannot buy stocks or commodities.
Barron’s: – Gundlach: ‘ratchet down’ 2013 bond return expectations. – DoubleLine‘s Jeff Gundlach on Tuesday reiterated his bearish stance on bonds heading into 2013.
Benzinga: – S&P Sees Strong 2013 for bond, emerging markets ETFs. – With inflows to exchange-traded products on a record pace this year, industry observers and market participants are turning to their heads to what 2013 has in store for ETFs.
Jon Springer: – Reasons to Beware the temptations of emerging markets debt. – The historically low rates in the US have changed the income environment from investing in AAA no risk of default Treasuries with a 5% yield to investing in low-grade debt for the same yield. The problem is that this low-grade debt that Moody’s defines as “speculative grade” has a 1 in 10 chance of defaulting in 4 years, and a 1 in 7 chance of defaulting within 6 1/2 years.
Barron’s: – Reasons to Buy emerging market bonds. – Yields on bonds of all stripes near record lows and the potential hit from rising rates is at an all-time high. In this yield starved environment, investors should consider taking a larger stake emerging-market corporate bonds, UBS said in its December CIO Wealth Management report.
Bloomberg: – Bond market trusts Bernanke to make his inflation target. – As Ben Bernanke considers whether to worry about inflation before adding to his record monetary stimulus today, he has the bond market on his side.
Bloomberg: – Bond disclosure before debt sales considered by US regulators. – US regulators are considering whether to require underwriters to make bond documents available to the public ahead of municipal-debt sales in the $3.7 trillion market.
PBS News Hour: – What’s wrong with a municipal bond fund? – Why you shouldn’t invest all your cash assets in high yield municipal bond funds?
Bondsquawk: – What’s up with iPayment bonds? – The bond was priced at $85.45 at the end of closing on Wednesday. By the end of trading on Thursday, the bonds cratered by 7.6% on the day and closed at $78.99 for a Yield to Worst of 16.21%. Since that low print, the bonds have rallied back to where it started at $85.45 for a Yield to Worst of 14.18%. So whoever bought the bonds at that low price made over 8.2% in just a few days.
Morningstar: – Four key areas for assessing municipal health. – Pensions and other post-retirement benefits will continue to be a growing concern for municipal governments and muni investors for years to come, says Morningstar municipal credit analyst Rachel Barkley.
Bondsquawk: – Our high yield bond portfolio. – Here’s a look at Bondsquawk’s High Yield Bond Portfolio which consists of 12 bonds, one from each diverse sector. The model is used to illustrate an active High Yield portfolio that has bonds rated from BB+ or lower. The goal of this model portfolio is total return so both income and price changes are considered in determining the allocation.
Cate Long: – Michigan excludes police and fire unions from “right to work”. – The actions of Michigan Republicans were rushed and poorly considered. Making such big changes in state law should not be done without thorough debate of the pros and cons of the issue.
Gross: Feds Twist ends – more check writing begins – 500 billion a year – money for nothin – no cost to govt.
— PIMCO (@PIMCO) December 12, 2012
The Fed’s doing its part. But when is the president going to offer some cuts? When? What a great chance to do so
— Jim Cramer (@jimcramer) December 12, 2012
If this low-interest-rate climate persists, we think muni investors may appreciate the potential benefits of a yield-driven approach
— Rochester Funds (@RochesterFunds) December 12, 2012
Some new bond investors likely to be surprised by their losses if rates back up, says Russ Koesterich,BlackRock chief investment strategist
— Daisy Maxey (@DaisyMaxey) December 12, 2012
Seems odd that Fed/Treasury could find $700 billion to avert financial crisis but cant offset going over fiscal cliff. Would cost less no?
— Cate Long (@cate_long) December 12, 2012