Best of the Bond Market for June 29th, 2012
Reuters: Stockton, California’s insured debt proves alluring – About half of the $700 million of debt issued by bankrupt Stockton, California, is insured and a few traders have carried on some speculative purchases of its bonds, investors said on Thursday.
Fox Business: Assured Guaranty Blasts Stockton, Calif., Bankruptcy Decision - Municipal bond insurer Assured Guaranty Ltd. (AGO) criticized the decision by Stockton, Calif., to file for bankruptcy, saying Friday the city didn’t fully explore all options before seeking court protection to reorganize its debts. Assured backs approximately $161 million of the city’s debt.
Reuters: U.S. municipal bond sales to sink to $59.6 million – U.S. municipal bond sales next week are expected to drop to the lowest weekly total in more than 20 years with issuance estimated at only $59.6 million, according to Thomson Reuters estimates on Friday.
John Orcutt: Muni Maturing? Proceed With Caution! - There are two reasons for this and they are as follows: 1) New-issuance was down 32% last year and that trend is expected to continue. 2) Interest rates remain at historical lows.
ETF Trends: Investors Seek Refuge in Bond ETFs – within the ETF universe, the funds with the largest inflows were those tracking government and corporate debt. Government bond ETF added $3.9 billion and corporate bond ETFs attracted $3.4 billion. Meanwhile, international and emerging market stock ETFs lost $4 billion and high yield bonds dropped by $976 million.
The Big Picture: Equity Prices and Bond Yields from 1800 to Present
BondSquawk: After Euro Summit Statement Debt Crisis Pressures Ease – The yield on Spanish 10-Year bonds have dropped 43 basis points from yesterday’s close to 6.51% while Italy’s 10-Year is currently yielding 5.874%, a fall from Thursday’s mark of 6.196%. US 10-Year yields are trading at 1.65%, up 7 basis points.
Learn Bonds: World Bond Funds: Do You Know the Risks? – US debt only makes up 36% of the world market. By opening up your portfolio to include bonds from the other major economic powers of the world, there should be great investment possibilities. However these possibilities also come with complications.
BlackRock: The Road Ahead For Bonds – With current yields for the benchmark 10-year US Treasury bond hovering near its historic low, long term annual bond returns will likely be in the 1-3% zone since returns historically mirror starting point interest rates.
BondSquawk: A Look at the Chart of the 10 Year Treasury Note – After reaching historical lows of 1.44% in early June, the yield on the current 10-Year has bounced and remained range bound in recent weeks forming a symmetrical triangle with neither bulls nor bears in control.
FT: On the transfer of risk and the mystery of low yields – Maximum supply means nothing in its own right. Supply must be taken in the context of global safe assets, which are diminishing, and in the context of assets generally. Risky assets included.
Richard Bloch: Watching And Worrying About Corporate Bond Spreads – The difference between Moody’s Baa-rated bonds and 10-year Treasuries? Well, that spread is now about 334 basis points, and it’s pushing against the highest level we’ve seen since the height of the financial crisis in early 2009.
MarketWatch: Bond Funds May be on Borrowed Time – Indeed, the developed world isn’t getting any younger and investors’ hunt for lower-risk, income-generating opportunities will only increase. That keeps pressure on fund managers. Should they accept this new fixed-income world of higher-risk, lower-rates and strategically move about within this new scenario — even if that means short-term pain (remember, fighting the Fed has been a losing proposition of late)?
Community Press: Listen to the bond market – Do you want to know where the smart money thinks the economy is going? Forget about watching the day-to-day horse race of the stock market. Concentrate on what the bond market is saying.
Little known fact, there are 9 municipalities called “Stockton” in the US.Only one has filed for bankruptcy.
— Rochester Funds (@RochesterFunds) June 29, 2012
— Matt O’Brien (@ObsoleteDogma) June 29, 2012
— Nicola Theron (@nicolatheron) June 29, 2012
Gross: Farmers and investors tip: Make hay while the sun shines. Squirrel lovers tip: Save nuts for the winter.
— PIMCO (@PIMCO) June 29, 2012