Albert Edwards Claims Victory as Bond Bears Go Down with Ship…and More.

Best of the Bond Market for May 31st 2012

Business Insider: Albert Edwards – HAHAHAHA, The Bulls Aren’t Laughing Anymore, The Stock Market Will Collapse And All Hope Will Be Lost – In his latest note, SocGen’s famously bearish Albert Edwards looks around at interest rates falling all over the place and Europe in chaos, and gives himself a good chest-beating, while mocking the equity bulls for yapping about how cheap stocks are.  There are some pretty scary charts taken from his research in this article as well which compare our current situation to Japan.


Bond Buyer: Market Post: Munis, Treasuries Run Up On Europe Fears Munis were steady to firmer Thursday, afternoon, according to the Municipal Market Data scale.. On Wednesday, the 10-year yield fell three basis points to 1.80% while the 30-year yield dropped four basis points to 3.10%. The two-year yield closed steady at 0.33% for the sixth consecutive trading session.  Treasuries were stronger Thursday, although yields came up off their record lows set this morning. The benchmark 10-year yield fell three basis points from Wednesday’s close to 1.59% while the 30-year yield dropped four basis points to 2.67%. The two-year yield fell one basis point to 0.27%.


Greg Mankiw: On Trying to Time the Bond MarketDon’t try to time the market.  My own asset allocation remains 60 percent stocks, 40 percent bonds, with wide diversification in each category.

PIMCO: Bill Gross’ June Investment Outlook:  Summary from the article:

  • Soaring debt/GDP ratios in previously sacrosanct AAA countries have made low cost funding increasingly a function of central banks as opposed to private market investors.
  • Both the lower quality and lower yields of such previously sacrosanct debt represent a potential breaking point in our now 40-year-old global monetary system.
  • Bond investors should favor quality and “clean dirty shirt” sovereigns (U.S., Mexico and Brazil), for example, as well as emphasize intermediate maturities that gradually shorten over the next few years. Equity investors should likewise favor stable cash flow global companies and ones exposed to high growth markets.​
Learn Bonds: Are PIMCO Total Return Fund Investors Missing Out?  – The BOND has outperformed the PIMCO Total Return fund which it is designed to track, by close to 2%.  This is a huge number in today’s low interest rate environment, and one that has investors in the Total Return Fund wondering: Am I missing out?

Reuters MuniLand: Muniland Retail Bond Buying Getting Some More Attention – Good summary of some of the recent changes at the MSRB as a result of Dodd Frank.  Also great link to MSRB’s new investor toolkit which looks like a great resource.

Bloomberg: Stockton Council Plans Vote On Bankruptcy AuthorizationThe city manager of Stockton, California, may be granted authority to seek bankruptcy protection in a City Council vote scheduled for June 5, moving one step closer to a fate the city has sought to avoid.

Bloomberg: Banks, Advisers Face Disclosure Of Muni-Bond Fee PaymentsThe Municipal Securities Rulemaking Board, which crafts regulations for the $3.7 trillion market, is considering whether to require underwriters and advisers to disclose fee-splitting agreements or other incentive payments tied to municipal-finance deals. Banks already must begin reporting such arrangements in August to municipalities under rules approved by regulators.

Index Universe: LQD ETF Adds $196 Million Investors plowed $196.8 million into the iShares iBoxx Investment Grade Corporate Bond Fund (NYSEArca: LQD), making it No. 2 on IndexUniverse’s “Top 10 Creations” list. Stocks were down on concerns about Greece’s debt crisis and the potential for financial contagion.

Bloomberg: Defaults May Loom On California Redevelopment Agency DebtAs many as 100 municipalities that took over bond obligations when California erased redevelopment agencies may not get the tax revenue they’re counting on tomorrow to make payments, the state Finance Department said.  “It is very easy to believe that all real obligations (bonds) as determined by the state will indeed be paid off on time and on schedule,” McCleary said by e-mail. “However, because of local (internal) cash-flow issues and the way cities structured their budgets, the reality is many enforceable obligations may not get paid in their entirety this fall.”


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