Homebuilder Bonds are a Buy…Positioning for Rising Rates…and More!

 

Best of the Bond Market for June 21st, 2012

Counting Pips: The Bond Investing Opportunity of a Lifetime? - Homebuilders are cheap, especially the bonds.  Beazer currently has a cheap bond that will give you a minimum expected annual return (MEAR) of about 12% for the next six years.

Michael Terry: PulteGroup (homebuilder) Bonds Look like a buy - PulteGroup is on the road to recovery.  It also appears that the market has, at this point, fully valued the equities….investors should consider climbing up the capital structure into bonds as they will benefit from further fundamental strengthening of the group and provide investors with a cash flow stream.

Ploutos: Strategies To Position Your Bond Portfolio For Interest Rate Moves - This article presents two simple to implement trading strategies to generate higher levels of risk-adjusted returns from your bond portfolio: one provided by a recent academic paper by Naomi Boyd of West Virginia University and Jeffery Mercer of Texas Tech University and one provided by the article’s author, Seeking Alpha’s Ploutos.

BusinessWeek: The Fiscal Cliff Just Got Steeper - The extension of Operation Twist means that additional stimulus to the economy is now scheduled to be withdrawn at exactly the same time—so the fiscal cliff has just gotten steeper….the program’s new expiration date: Dec. 31, 2012.

Learn Bonds: Using Bank Loan Mutual Funds to Hedge Rising Interest Rates - If the US is entering a multi-year period of rising interest rates, Bank Loans Mutual Funds should outperform High-Yield Bond funds while providing a similar level of yield.

ETF Trends: The Bullish Case for High Yield ETFs - there are a number of factors that support the high yield corporate debt category. Of course yield is a big reason, due to the constant search for income in today’s market. Downside protection is another reason to favor corporate debt, as well as good fundamentals

Bond Buyer: Market Update Secondary Stalls as Attention Turns to Georgia  - Munis were stronger Thursday afternoon after a weaker session Wednesday, according to the Municipal Market Data scale. Yields inside 10 years were steady while yields outside 11 years fell as much as three basis points.  Treasuries were stronger after weak economic data in the morning. The benchmark 10-year yield and the 30-year yield each fell three basis points to 1.62% and 2.69%. The two-year dropped one basis point to 0.31%.

NASDAQ: Household-Name Borrowers Flooding US Corporate-Bond Market – A rash of companies, led by household names Caterpillar Inc. (CAT), 3M Co. (MMM) and Target Corp. (TGT), crowded the U.S. bond market Thursday with nearly $6 billion of debt offerings, seizing on an opportunity to borrow, with fewer negative headlines out of Europe and expectations of additional federal stimulus in the U.S.

Research Puzzle: Difficulties in Analyzing Unconstrained Bond Funds - I feel safe in saying that most investment people who aren’t fixed income professionals would have a hard time explaining how the pieces fit together and what will happen under a variety of interest rate scenarios.

WSJ: Money Market Funds Have Been Bailed Out a Lot - Money market mutual funds have been rescued from financial trouble by their parent companies more than 300 times since the 1970s, about 100 more than previously reported, according to a new Securities and Exchange Commission study.

WSJ: European Companies Tapping US High Yield Market - Speaking at the Capital Markets Roundtable today, Toal said issuance by European companies has accounted for 11% of total bond volume so far this year, compared with 7% for all of 2011.

CNN Money: 4 Ways Investors can (still) find yield - 1. Emerging Market Bonds 2. Mortgage Bonds 3. Blue Chip European Stocks 4. Master Limited Partnerships

MarketWatch: US Sees Record Demand for TIPS – The Treasury Department sold $7 billion in 30-year inflation-indexed debt on Thursday at a yield of 0.52%

Seeking Alpha: The Trailing 12 Month Default Rate for High Yield Rose to 2.2% - above 2% for the first time since October 2010

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