Junk Bond Fund Exodus Continues…Muni Market Braces for Sandy Aftermath…Busiest Friday of 2012..and more!

Best of the Bond Market  for November 2nd, 2012

Barron’s:Junk bond funds back in the red with $619M weekly outflow. – Junk bond funds and ETFs reported a $619 million net outflow in the storm-shortened market week ended Wednesday, according to Lipper data. It’s basically been a six-week losing streak for junk bond funds at this point, with over $2 billion in net weekly outflows during that time, despite relatively minuscule weekly net inflows of $9 million and $52 million in the two most recent weeks prior to this week’s outflow.

Bloomberg: – Superstorm Sandy’s record damages reach bond market. – Local-debt investors absorbing the steepest annual issuance jump in almost a decade are bracing for added sales to pay for damage that Hurricane Sandy caused to the New York metropolitan region.

NASDAQ: – Sandy may strap muni budgets but shouldn’t cause defaults. – Flooded streets and splintered homes suggest bleakness for municipalities left in Hurricane Sandy’s wake, but emergency financing from the federal government should help soften the blow for both cities and municipal-bond investors alike.

Bloomberg: – Microsoft leads $10.3 billion of sales in year’s busiest Friday. – Microsoft and Verizon are leading borrowers in the U.S. selling at least $10.3 billion of bonds in the busiest Friday this year as issuers stymied by Hurricane Sandy attempt to complete deals before the U.S. presidential election.

Sober Look: Investment grade credit spreads are back at historical lows - Investment grade spreads are now back at the multi-year support. Much below that and we are entering the “bubble period” (pre-recession) levels. If the Fed has its way, we are going there.

Reuters:US muni bond funds report $123 million outflows. – U.S. municipal bond funds reported $123 million of net outflows in the week ended Oct. 31, marking just the second week of outflows since November 2011, according to data released by Lipper on Thursday.

WSJ:Muni market looks towards Puerto Rico’s elections – For some municipal-debt investors, the most closely watched political race isn’t in a swing state. It is in San Juan, Puerto Rico. The commonwealth’s current governor, Luis Fortuño, a darling of the $3.7 trillion municipal-bond market for reducing the government’s budget gaps, is locked in a tight race with a virtual unknown on Wall Street, Alejandro Garcia Padilla.

FT:US economy vulnerable to more than just hurricanes Says PIMCO’s El-Erian. – This release of the monthly US jobs report this morning was sandwiched between two historical events: the devastating hurricane that hit the country’s eastern seaboard and what many see as a particularly important presidential election. While the report will likely have little impact on undecided voters, it tells us a lot about the continuing vulnerability of the economy to external shocks such as Hurricane Sandy.

WSJ: – Emerging-market funds draw smaller inflows. – Emerging-market bond and equity funds drew smaller inflows in the latest week, as investors reduced their exposure to risk ahead of next week’s U.S. presidential election, according to fund-tracker EPFR Global.

Learn Bonds:Confusing investing safely, with safely investing in bonds. – The popular YAHOO! Finance Show Breakout, with Larry Swedroe brought up a number of issues we feel should be discussed. Namely investors should invest in bond mutual funds and ETFs.

Reuters:US bond prices fall after stronger-than-forecast job growth. – US Treasuries prices fell after a government report showing stronger than forecast U.S. job growth in October offered a hopeful sign for the economic recovery.=

Reuters:Overseas investors want Obama win. – Overseas investors, many of whom are creditors to the highly-indebted US government, reckon a re-election of President Barack Obama would be best for world markets even if US counterparts say otherwise.

Reuters:US corporate bond issuers rush to market ahead of election. – The US corporate bond market came back with a bang this week after being shut down by the devastating storm Sandy in the US northeast.

Barron’s:Feeling Brave! These bond portfolios invest 25% or more in Puerto Rico. – Puerto Rico’s shaky fiscal situation makes its bonds look like a hidden value to some fund managers. To others, this is a danger zone.

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