Sub Prime Market Up 24% YTD…US Debt Hits All Time Low Yields…and more!

Best of the Bond Market for July 24th, 2012 

Bloomberg: The market for the same sub prime mortgage bonds that caused the financial crisis is up 24% in 2012 – The rally in U.S. home-loan securities without government backing is accelerating as investors wager the housing bust is over and supply is sopped up by bond dealers emboldened by new capital rules.

Learn Bonds: All about investing in mortgage backed securities – our interview with BlackRock’s Akiva Dickstein.

Business Insider: US Government Borrowing Costs Hit New All-Time Lows – Yields on the 10-year fell below 1.3925 percent, yields on five-year Treasuries fell to 0.541 percent, and yields on 30-year bonds fell to 2.46 percent.

California Beach Pundit: The TIPS Market is signaling extremely weak economic growth ahead –  If TIPS are extremely expensive, but inflation expectations are normal, then the real message is that interest rates in general (both real and nominal) are extremely low. And why are interest rates in general extremely low? The only logical answer is that investors believe that the outlook for the future is very weak growth and average inflation for as far as the eye can see. Very weak growth, as in the weakest growth we’ve seen on average in my lifetime.

The Big Picture: Moody’s downgrades Germany, Holland, and Luxemburg – Finland is now the only EZ country with a AAA stable rating.

John Mauldin: Hoisington Investment Management feels low rates will continue for some time – Amazingly, twenty years after each of these panic years ( 1873 and 1929 in the US and 1989 in Japan) long-term yields were still very depressed, with the average yield of just 2.5%.

Bloomberg: Falling corporate debt supply will continue to support corporate bond market – Interview with Blackrock’s Jeff Rosenberg.

BondSquawk: Corporate bond investors are becoming more bearish –  41% of the investors expect spreads to widen over the next one month compared to 36% last month.

NASDAQ: Is it time to buy build america bond ETFs? – due to a flat supply of the securities-and little prospect for more BABs in the near future, investors could see higher levels of demand continue in this bond segment, potentially keeping prices high for those seeking to make a play on the space.

iStock Analyst: Is there an apocalypse coming in municipal bonds? – An apocalypse, by definition, is an event involving damage on a catastrophic scale.  There are definitely problems, like in California. Still, it remains to be seen how many more bankruptcies may erupt there or in other parts of the United States.

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