Questions on a Popular Bond ETF’s Safety….Nokia Bonds a Buy?…and More!

Best of the Bond Market for July 20th, 2012 

Zero Hedge: With a 24.3% weighting in financials – just how safe is the popular LQD Bond ETF? – In a diversified and actively managed credit book, falling for the easy route of buying the liquid IG bond ETF LQD may run some into problems – no matter how much its ‘price’ tracks Treasuries.

Michael Terry: Nokia is fundamentally weak, but cash supports bonds – I continue to believe that the best way to position this company is through the 2019 debt (unfortunately, I don’t have pricing for the EUR issues), as the yield is 10% and there is significant upside should the company get through their transition sooner than later.

Benzinga: Beating BOND: Some Bond Funds Trumping PIMCO Juggernaut – Yet for the warranted superlatives, BOND has not been the best-performing bond fund investors could have been involved with over the past 90 days. Believe it or not, there are multiple bond ETFs that have outpaced BOND in the past three months and some are worth more than just a passing glance.

Forex Live: US Lawmakers Disagree Over Municipal Bond Default Risks –  Lawmakers Friday disagreed over the level of default risk in the municipal sector, at a time when recent bankruptcy filings in California raise the question of the eroding stigma associated with taking that step.

Reuters: Yield on AAA 30-yr US muni bond at new preliminary low – The yield on AAA-rated U.S. 30-year municipal bonds was marked down 2 to 4 basis points in a preliminary pricing scale by Municipal Market Data on Friday.

Learn Bonds: Treasury Auctions 101.  All told, the US Treasury Department issued $7.5 trillion in debt in 2011. All of this debt was sold using a dutch auction process.

Minyanville: Corporate Bond Issuers have accumulated $17 Billion from new issues in the last two days – with which to do anything they want, including, for example, squeezing the life out of people shorting their equities.

IPREO: Next Week’s Muni Calendar

Research Puzzle Pix: Trying to have a new bond fund like (PIMCO’s BOND) mimic an old fund is no easy task – it’s unrealistic to assume that they’re going to have the same instruments in each and while you might fine tune the portfolio attributes, you’re not going to get identical performance.  That said, the gap between the fund and the ETF is larger than you would expect under the circumstances.

BlackRock: With only 3% inflation, the purchasing power of an annual income of $100,000 dwindles to $47,761 in 25 years. – See chart.

Marketwatch: Treasurys strengthen as Spain worries grow – Strong appetite for bonds pushed 5-year bond yields to a record low during the session.

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