Best of the Bond Market for July 30th, 2012
Barron’s: Doug Kass’ favorite short of the next decade is US Bonds - The 10-year yields under 1.5%, less than half the yield during the recessions in 2001 and 2008. That means I am paying over 65 times earnings for a 10-year-bond, a rich price even by Amazon’s or LinkedIn’s standards.
NY Times: A profile of PIMCO Co-CEO and CIO Mohamed El Erian - Mr. El-Erian, a former I.M.F. official and an admired economic thinker, is increasingly becoming the public face of Pimco — a one-man marketing machine for the company, its views and its agenda.
Reuters: Felix Salmon calls out NY Times Fabrikant for errors in PIMCO article - regarding the above article.
Index Universe: Don’t get buried by bonds – for a retirement plan—not as a trader—thinking you’re safe by including those as one of your long-term assets is crazy. They are going to prove to be very bad investments.
Learn Bonds: Why you can still trust corporate bond credit ratings - The major rating agencies actually have an excellent track record of getting corporate bond ratings correct.
FuturesMag: Mortgage bond investors skeptical on housing turnaround – Only 34 percent of respondents in a poll last week agreed that “home prices have bottomed nationally,” with 11 percent expecting values to fall an additional 5 percent or more, according to a July 27 report by the bank’s analysts. A total of 56 percent said prices will decline less than 5 percent.
FT: Credit Suisse bonds achieve 97% take up – Credit Suisse‘s shareholders have taken up 97 per cent of a SFr1.9bn convertible bond issue which forms a key part of the bank’s plans to shore up its capital position following pressure from the Swiss National Bank.
WSJ: Is 1.25% the next stop for the 10 year treasury? – That is why a once-unthinkable 1.25% yield on 10-year Treasurys is now being penciled in by many bond investors for this year. With a recent flare-up of the European debt crisis and worries about global economic growth driving investors toward the safety of U.S. debt, pushing down yields, the 10-year note logged a series of record lows last week.
WSJ: A safer way to buy “junk” bonds – Short-term high-yield bonds have been less rocky than junk bonds overall. The Bank of America Merrill Lynch 0-5 Year U.S. High Yield Constrained Index—one measure of short-term high-yield performance—sustained losses of just 0.9% in May, 0.4 percentage point less than the loss investors suffered in the standard high-yield index.
SmartMoney: The case for keeping your treasuries – Treasurys do more for investors than provide a dribble of income — they also provide a safe haven when trouble strikes and other assets tumble. A safer approach is to boost yield a little bit without taking gobs of extra risk.
Vanguard: What lies ahead for bond market returns - But with current bond yields low, interest rates lower, and the economic outlook cloudy at best, Vanguard doesn’t think future bond returns will be nearly as robust as they’ve been. In fact, looking forward, we’re inclined to expect significantly elevated levels of volatility in the bond market.
Investment News: Ex “King of Bonds” makes bid to regain crown. - Western Asset Management Co. has re-branded itself and for the first time is reaching out to retail investors — all in a bid to reclaim its place as the top fixed-income manager. After stumbling going into the financial crisis, they are now back on track, beating the PIMCO Total Return fund by a wide margin since 2009.
According to Bloomberg, 63% of municipal issuance year-to-date has been for refunding. Muni market is shrinking amid strong demand.
— Rochester Funds (@RochesterFunds) July 30, 2012
Gross: Fridays T-Bond selloff proved 1 thing: You can lose 1 year’s interest in 1 day when you own the 30yr.
— PIMCO (@PIMCO) July 30, 2012
there will likely be a period of malaise in the municipal bond market as the strong seasonals give way – “bid and buy” is the strategy
— Michael Pietronico (@MillerTabak) July 30, 2012