Bill Gross’ Investment Outlook…Muni Market’s Own LIBOR Like Scandal?…and more!

Best of the Bond Market for July 31st, 2012

PIMCO: Bill Gross’ monthly investment outlook is out – an investor should continue to expect an attempted inflationary solution in almost all developed economies over the next few years and even decades.

WSJ: Regulators probe municipal bond market index for LIBOR type issues – Several municipal-debt-market participants have already complained that the industry’s benchmark is set with little transparency. The scope of the SEC’s investigation is unclear, but an SEC enforcement official questioned Thomson Reuters officials late last year as part of the agency’s broad look at municipal-bond disclosure and pricing information.

Learn Bonds: What the TLT chart is telling bond traders – The TLT could fall a lot further from its current level before finding support from buyers in the market, at least from looking at the charts only. Even if the TLT does fall dramatically from here, until it breaks through the 123.26 support level, the uptrend we have been in still very intact.

All Star Charts: Interest rates are at a key inflection point – 3 interesting charts make the case.

ETF Trends: Fallen angel bond ETF sports 6% yield – The Market Vectors Fallen Angel High Yield Bond ETF (ANGL) tries to reflect the performance of the BofA Merrill Lynch U.S. Fallen Angel high Yield Index, which holds below investment grade corporate debt that were rated investment grade at the time of issuance.

NY Times: SEC urges municipal bond market reforms – The report devotes most of its attention to the relative lack of information that is available to investors about the municipal bonds they are buying. This has made it easier for financial firms to charge big markups when investors buy and sell the bonds, according to the report.

Bond Squawk: More traders expecting the 10 year treasury at 1% than 2%.  – results of their recent poll on where traders expect the 10 year to trade over the next 12 months.

Businessweek: Bond gains accelerate in busiest July since 2009. – Gains of 2.23 percent in July on debt from the neediest to the most creditworthy borrowers are the most since 2.38 percent in January, Bank of America Merrill Lynch index data show. A $7.5 billion offering from Anheuser-Busch InBev NV (ABI), the world’s largest brewer, led $277.8 billion of issuance since the end of June as yields on investment-grade debt touched unprecedented lows.

Investment News: Why muni’s are still attractive – If the spread between AAA and BBB muni’s narrows to historical norm investors could potentially realize 82 bps of performance in addition to the 3.66% YTD total return delivered by the Barclays Municipal Bond Index as of the end of June.

Rick Ferri: Pick your muni fund carefully – The odds are low when trying to select an actively managed fund that will beat an index fund and the meager outperformance relative to high underperformance doesn’t make it a fair game. That bet is not worth the risk.

Business Insider: Unilever and Texas instruments just issued debt at the lowest rates in history.  – Unilever, the large European food conglomerate, just sold $550 million worth of 5-year notes with a coupon of just 0.85 percent.  Texas Instrument has broken a record for the lowest coupon on 3-year debt at just 0.45 percent.


  1. Colorado Jack says

    An attempted inflationary solution? Not in the US. Presidents and their advisors know recent history. Jimmy Carter and Jerry Ford found out that moderate inflation is political poison. So whoever is President will make sure the Fed doesn’t go down that route. (Anyone who thinks the President can’t give orders to the Fed is naive.)

    If the US really has trouble paying, it will default. Probably partial and it won’t be called that.

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