Bond Market Flashes Warning Sign….Bill Gross Fights Dan Fuss and more!

Bond Squawk: The bond market is sending the opposite message of stocks, a bad sign.  - Since the beginning of June, bonds have continued its onslaught by posting bigger gains as yields have been heading lower in a sign that market participants remain uneasy of concerns that the stock market has completely ignored.

Investment News: Bill Gross and Dan Fuss are squaring off in a battle over Treasuries. – Bill Gross, managing director and co-chief investment officer of Pacific Investment Management Co. LLC, has a 35% allocation to U.S. government bonds in his flagship fund, while Dan Fuss, vice chairman of Loomis Sayles & Co. LP, doesn’t own any.

FT: European bond market confidence evaporates as investors flee Spain – Madrid’s 10-year borrowing costs on Monday soared to their highest levels of the euro era, rising to as much as 7.57 per cent and, according to investors, making a full international rescue all but certain.

Bloomberg: Treasury yields drop to records as European crisis worsens – The benchmark 10-year yield fell two basis points, or 0.02 percentage point, to 1.43 percent at 1:55 p.m. in New York. The 1.75 percent note due in May 2022 rose 7/32, or $2.19 per $1,000 face amount, to 102 28/32. The yield fell to as low as 1.3960 percent, with the five-year rate dropping to 0.5411 percent and the 30-year yield sliding to 2.4752 percent.

Learn Bonds: How to choose a core bond fund – in 8 simple steps.

BlackRock: 6 questions you should ask your advisor about income investing – 1. What are the one or two most important needs I want my investments to help me address?  2. Is it more important for me to receive income from investments today or to grow the value of my investments over time? 3. Do I expect to use any income I receive to pay a fixed expense or pay for expenses that may increase over time?  4. Am I comfortable having more variability in the value of my initial investment in exchange for potentially higher levels of income over time? 5. Thinking about all my sources of income today, on a monthly or yearly basis, how much income would I realistically like my portfolio to produce? 6. What income-producing funds are best equipped to help me meet these goals?

Hussman Funds:Time is economically worthless and that economic malaise will extend for years”. – this is what interest rates are telling you; what the Federal Reserve is telling you; what the equilibrium created by lenders and borrowers is telling you.

The Reformed Broker: Are junk bonds in a bubble?  - Two opposing views.

Bloomberg: Private-equity firms from Blackstone Group LP (BX) to Carlyle Group LP (CG) are loading up on Junk Bonds.  - Private-equity firms are betting on credit even as a global rush of cash into junk-rated debt in the U.S. pushes yields on the bonds to within 0.5 percentage point of the record low, according to Bank of America Merrill Lynch index data.

High Yield Municipals: Value Quickly Disappearing From BBB-Rated Munis – Since muni funds are basically just proxies for retail investors,  anyone with a bit of a contrarian mindset may want to take a step back and consider if the high yield tax-exempt sector has now become fully valued or even over-valued.

Sober Look: Corporate bond liquidity is drying up.  - This is going to create a problem for medium size US corporations because all the liquidity will continue to shift toward the largest issuers. Thus Dodd-Frank in its ultimate wisdom has raised barriers to entry into the debt markets for middle market US companies. Congratulations.

Investor Place: Can the rally in corporate bonds continue? - For now, the key factors that have fueled the rally in corporates remain in place: improving corporate performance, a low-yield environment, and strong inflows into mutual funds and ETFs.

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