Best of the Bond Market for May 4th, 2012
Yesterday @DougKass Tweets:
Today @Cr3dit Tweets as yields drop further and bonds move in the opposite direction of @dougkass’ trade.
MarketWatch: 10 Year Under 1.90% Long-term yields have longest run of weekly declines since 2008 – Ten-year yields have fallen for a seventh straight week, the longest string of declines (or gains in price) since the depths of the U.S. credit crisis at the end of 2008.
Financial Times: Mohamed El-Erian – America’s Jobs Crisis Confirmed – With just 115,000 new jobs in April, the US economy is not creating enough employment opportunities to make a dent in the 12.5m jobless Americans in the labour force, of which a stunning 5.1m are long-term unemployed.
All Star Charts: No One Has a Clue Where Interest Rates are Headed – JP Morgan’s Treasury Bond Client survey shows on paper exactly what I’m hearing out there. 60% of all those surveyed were on the fence and neutral on interest rates, 23% were bullish and just 17% were bearish. In other words, no one has any clue where rates are going!
NY Times: State Bonds in Jeopardy as Tobacco Cash Fades (h/t @munilass) – Dozens of states, counties and cities issued the bonds to receive billions of dollars upfront from the 1998 settlement. But now they are seeing smaller payments than expected from the companies as tobacco sales decline in America.
Reuters MuniLand: Some Interesting Municipal Bond Trading Data
- Revenue Bonds trade a lot more than General Obligation bonds.
- Revenue bonds accounted for 69 percent of the municipal debt outstanding as of Mar. 31, 2012, according to Bloomberg.
- Revenue bonds seem to be much more popular among institutional buyers like pension funds, mutual funds and insurance firms than general obligation bonds.
Bloomberg: Wall Street’s Legal Magic Ends an American Right (h/t @ritholtz) – The case known as Shearson v. McMahon would wind up locking investors out of U.S. courts any time they tried to sue a broker….“shall be settled by arbitration” clause.
Pragmatic Capitalism: Independent Inflation Gauges. Still No Inflation Here – So what are the independent gauges telling us? They’re saying the same thing the BLS data is – inflation is still very low by historical standards.
Washington Post: Mohamed El-Erian – The Fiscal Cliff Cometh The sequestration mandated by the Budget Control Act of 2011 and the reversal of the Bush-era and payroll tax cuts would essentially mean withdrawing from the economy some 4 percent of the national income in one blunt go — and this doesn’t factor in possible knock-on effects.
Financial Samurai: 30 Year Fixed or 5 Year ARM? The Choice is Obvious Yes, there will be occasional upward blips in pricing, but I highly doubt there will be a 5-10 year continuous ramp in inflation, which means your 5-10 year ARM is just fine.
Market Watch: Pensions swap stocks for bonds, capping rates – Company pension plans, which manage almost $7 trillion in investments, are likely to help keep bond yields low as they shift out of stocks and into fixed income to protect decades of future retiree payouts.
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