Best of the Bond Market for October 10th, 2012
BusinessWeek: – Moody’s targets dozens of Californian cities for downgrade. – Moody’s announced Tuesday that it will review dozens of California cities for possible downgrades amid mounting concern over municipal bankruptcies and bond defaults.
Washington Post: Obama’s next Fed chief – A list of likely candidates to fill the Fed chairman’s spot if Obama is re elected.
Reuters: – U.S. muni bond tax exemption gets new D.C. defender. – The national trade group representing U.S. bond dealers announced on Wednesday the formation of a coalition to defend the tax-exempt status of municipal bonds, a key trait of the $3.7 trillion market.
Reuters: – Booming emerging corporate debt vies with U.S. junk. – New funds targeting debt issued by emerging market companies have helped push outstanding issuance past $1 trillion (624.4 billion pounds) as investors chase high returns while sidestepping problems in developed economies.
Mercenary Trader: – Hey Bill Gross, why so serious. – The real threat instead — in our humble view — is a persistently weak and degraded economic state — a sort of hellish purgatory — that lasts for many years, because toxic fiscal policy is never addressed, leading to rapid societal decay at the margins as more Americans grow destitute and the middle class vanishes.
Reuters: – Emerging market bond funds post standout performance in Q3. – The flagship funds of closely watched bond firms PIMCO and DoubleLine drew the most new money in the third quarter, but emerging markets bond funds grabbed the spotlight with their higher yields and strong performance.
Michael Harris: – PIMCO’s old and new bets: Should you replace treasuries with munis? – During February of 2011, PIMCO announced that it has sold its portfolio of U.S. Treasury bonds in anticipation of higher yields due to inflationary concerns arising from a second round of quantitative easing by the Fed, known as QE2. Expectations for lower bond prices (TLT) not only did not materialize, but instead yields fell straight down rapidly.
Learn Bonds: – How the NY FED’s critics helped promote the idea they attacked. – In the internet age, bad publicity can quickly turn into a favorable search engine position for an idea or company that is being attacked. While critics think they are hurting or discrediting an idea or company, the criticism often times disappears into the deep recesses of the web. However, the object of their attack is often left with an enhanced search engine ranking.
Bloomberg: – Best bond firms split on year end storm. – Debt strategists at top-ranked Wall Street firms can’t agree on what investors should do as yields on everything from government to corporate and asset-backed bonds plunge to record lows.
Kurt Shrout: – The best long term non junk bond investments. – Here’s a list of the best intermediate-term non-junk bond investments, the best short-term non-junk bond investments, mortgage-backed securities, funds that contain multiple types of bonds, junk bonds, inflation-indexed bonds, and non-U.S. bonds.
InvestorPlace: – High times for high yield funds. – This has been an incredible year for high-yield funds. The Fidelity Capital & Income Fund (MUTF:FAGIX) and the iShares iBoxx High-Yield Corporate Bond Fund (NYSE:HYG) have each returned almost 20% over the past 12 months, and currently yield around 5%. Both are rated “4 Stars” or higher by LB Fund Ratings.
ETF Trends: – Muni bond ETFs: yield, safety and tax advantages. – ETFs that invest in municipal bonds have seen very respectable inflows this year as investors comb through fixed-income markets in search of extra yield. Some investors are also using them as a safe haven in place of low-yielding Treasuries while the tax advantages of muni bonds are always a bonus.
Reuters: – S&P reports on speculative-grade bond market. – After trailing off in the spring and early summer, speculative-grade corporate bond issuance in the U.S. has rebounded handsomely in September to the highest amount on record, to $34.9 billion, according to a report published today by Standard & Poor’s Ratings Service.
Market Oracle: – The muni bond market minefield. – Whether it’s the university professor, the renegade analyst, or one of the most respected investors in the world, it’s clear that there are significant concerns about the health of the nation’s muni bond market.
Gross: QE’s and monetary policy move asset prices higher but have less effect on real economy. US grows at 1.5% currently.
— PIMCO (@PIMCO) October 10, 2012
@morgan_03 I can only explain how claims about leverage in the muni market are largely exaggerated so many times before I self-destruct.
— Bond Girl (@munilass) October 10, 2012
— Jason A. Voss, CFA (@TheIntuitInvest) October 10, 2012
— Muni Market Advisors (@Muni_Mkt_Advis) October 10, 2012