Best of the Bond Market for May 3rd, 2012
Huffington Post: David Einhorn and the Fed’s Jelly Doughnut Policy - Einhorn wrote a short book today on what he thinks the Fed is doing wrong:
Chairman Bernanke is presently force-feeding us what seems like the 36th Jelly Donut of easy money and wondering why it isn’t giving us energy or making us feel better.
And what they should be doing:
I know this isn’t conventional thinking, and it certainly isn’t the way the Fed looks at it, but I believe that raising short rates — not to a high level, but to a still low level of 2 or 3% — would be much more conducive to both growth and stability.
iShares: Is the High Yield Trade Getting Too Crowded? - They think not: …with yield levels around 7%, yield-hungry investors may find them worth the risk.
Barrons: HY Bonds Fall Below 7% Again - Even during the ultra-low-yield environment of the past couple of years, the 7% mark has held up as a dependable barrier for junk bonds, and any dips below that have been exceedingly brief.
Bond Squawk: Corporate Bonds Feel the Heat, Will Stocks Follow? - divergence between the Corporate Bond market and equities can be viewed in two ways. First, the credit sector is merely lagging equities and should catch-up eventually which could be driven by the continuation of favorable corporate earnings or a positive reversal of recent economic data such as Friday’s employment figures. The alternative is that investors in the Corporate Bond sector are concerned of risks that the equity markets are not reflecting.
Dealbook: No Wonder No One Wants to be in the Ratings Business (h/t @abnormalreturns) - The agency [SEC] brought a civil case against a tiny, iconoclastic ratings agency called Egan-Jones, run by the outspoken Sean Egan, accusing it, essentially, of filling out forms wrong.
Businessweek: PIMCO Totally Returned - Total Return Fund, the world’s biggest, has swelled to a record $259 billion, …and has returned 4.4 percent this year, beating 98 percent of its peers.
Bloomberg: Ohio Booze Bond Threatened – The group’s planned sale of taxable bonds backed by profits from the state’s wholesale liquor system has yet to take place [Because of Lawsuits], even though Ohio allocated $500 million of the proceeds to balance the current budget.
Bond Buyer: Time running out for Alabama Legislature do act on bankrupt JeffCo. – Few days remain in the Alabama Legislature’s annual session and lawmakers continue to argue over whether to provide bankrupt Jefferson County fiscal relief.
Reuters MuniLand: The United States Enters the Twilight Zone – the amount of U.S. debt outstanding has just surpassed the latest reading of our gross domestic product.
IPREO Markets: Next Weeks Muni Deal Calendar