Best of the Bond Market for April 24th, 2012
World Beta: US 10 Year Bond Yielding .5%? – Take a look at this chart comparing the current journey of the 10 year treasury to below 2%, to the same journey the Japanese 10 Year made on its way to .5%.
WSJ: Fed Reaffirms Low Rate Policy – Bernanke said the bank remains prepared to take further steps to stimulate the economy. “If appropriate … we remain entirely prepared to take additional balancing actions if necessary to achieve our objectives,” he said.
The Basis Point: Fed Statements Side by Side Comparison
AP: Bernanke’s Response to Shelia Bair – In a recent opinion piece in Fortune magazine, Shelia Bair, former chairman of the Federal Deposit Insurance Corp., argued that the central bank might be creating a bond market bubble similar to the housing bubble. The “Fed should declare victory and not intervene” by making further purchases of bonds, Bair said. Bernanke’s Response: it’s “a little premature to declare victory”
@bonscoop tweet: FOMC members = 3@ 2012, 3@ 2013, 7@ 2014 4@ 2015. The doves got less dovish while the hawks were as hawkish. Thus the market move.
Huff Post: Fed Unprepared to Deal with Economy Falling off a “Fiscal Cliff” – Bernanke warned that a series of tax increases and spending cuts built into current federal law and scheduled to take effect on January 1, 2013, would be a “significant risk to the economy.”
Bloomberg: California Above Deere Makes Ninth-Largest Economy a Deal – Two years after Moody’s Investors Service and Fitch Ratings changed standards to put municipal credits on the same footing as corporates, California and Illinois are among states that still pay more for debt than similarly or lower-rated corporations, according to data compiled by Bloomberg. Yet Moody’s says companies default at 86 times the municipal rate.
—-> @Bnells22 Tweets: less to do with ratings than high % of exemption seeking retail buyers, lack of bullet structure in
—->@Ritholtz Tweets: Lloyd Blankfein doing damage control after last nights bashing
Bloomberg: U.S. Should Weigh Changes to Muni Bond Tax, Senator Says – Lawmakers should “consider providing a uniform subsidy for bondholders,” Baucus said at the hearing in Washington. “A uniform subsidy would mean each taxpayer receives the same subsidy regardless of tax bracket.”
—->@munilass tweets: Federal policymakers’ understanding of their own tax policies just kills me
Bond Buyer: Groups: Protect our Munis – Five groups representing local governments are urging Senate Finance Committee leaders to maintain the federal tax-exemption for municipal bonds, ensure states and localities retain the authority to set their own tax policies, and refrain from preempting governments and threatening their fiscal health by granting preferential tax treatment to certain industries.
—->@Bnells22 Tweets: issuers balk when removal of tax-exemption is discussed, but loathe high taxable equivalent yields – can’t have it both ways
Ishares Tweet: “In ’97 the high yield market was 98% USD based. Today the USD represents only 77% of the market”
Congressional Budget Office: Federal Support for State and Local Governments Through the Tax Code
Reuters MuniLand: How American municipalities can learn from Parisian mistakes