Bond King Gundlach is on a Roll…Bond Danger Reaches High….and More!

Best of the Bond Market for July 12th, 2012 

Investment News: Bond King Gundlach’s Total Return Fund is on a roll - DoubleLine Total Return Bond Fund, run by Chief Executive Officer Jeffrey Gundlach and Philip Barach, has returned 5 percent this year through yesterday’s close, beating 95 percent of similarly managed funds.  The fund has taken in $12.5 Billion so far this year besting all other US mutual funds.

Bloomberg: Bond Danger Reaches Record High As Yields Lure – Corporate bonds have never been more perilous for investors who are scooping up longer-maturity debt at the fastest pace since 2008 in a bet the Federal Reserve will keep interest rates at record lows through late 2014.

BusinessWeek: 4 Things Investors Should Know about Emerging Market Bond Funds – 1. Keep performance expecations in check 2. Expect Volatility 3. Know Your Currency Risk 4. Understand what you are investing in.

Learn Bonds: What you should know before choosing a core bond fund – If you are considering going with an active manager then it is important to realize that the performance of one actively managed core bond fund vs. another can vary widely.  While all core bond funds will have many things in common, how a portfolio manager weights their portfolio in different sectors of the market and among different maturities can have a large affect on performance.

WSJ: Some Fed memebers worry about breaking the bond market – “Some members noted the risk that continued purchases of longer-term Treasury securities could, at some point, lead to deterioration in the functioning of the Treasury securities market that could undermine the intended effects of the policy,” according to the June FOMC meeting minutes.

Sober Look: Based on History Corporate Bonds Should be Out Performing Equities – Based on historical performance related to Real GDP Growth, credit should be outperforming equities.

Bond Squawk: Bond fund managers get more bullish.  Lower rates ahead? - With the yield of the 10-Year pushing sub 1.50%, 17 percent of all bond fund managers surveyed are bullish on rates, which is an increase from 15 percent from the prior week and the recent low of 11 percent from June 25.

Doug Short: Chart of Inflation, The Fed Funds Rate and The 10 year treasury 1960 to date

MarketWatch: US Sells Bonds at Record Low Yields – The Treasury Department sold $13 billion in 30-year bonds on Thursday at a record-low yield of 2.58%. Bidders offered to buy 2.7 times the amount of debt sold, versus an average of 3.62 times at the last four comparable sales, according to CRT Capital Group.

LA Times: Rising costs push california cities to the fiscal brink. - Facing the same financial stressors that pushed San Bernardino toward bankruptcy, cities across California are slashing day-to-day services and taking other drastic actions to skirt a similar fiscal collapse.

BusinessWeek: Not all municipal bankruptcies are the same – San Bernardino just became the third city in California to file for bankruptcy in less than a month. It’s tempting to think there may be some common post-bubble plague haunting the state, but each of the three towns fell for different reasons.

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