Best of the Bond Market for October 3rd, 2012
Bloomberg: – Pensions weaken 4th year as Illinois leads decline. – Funding for U.S. state retirement plans fell for a fourth straight year as insufficient contributions and inadequate investment gains overwhelmed cuts that more than 40 legislatures have made to benefits since 2007.
Financial Lexicon: – Here’s some bonds to carefully consider. – Here’s a list of five bonds trading over par that investors might find of interest. They range in maturities from four-and-a-half years to thirty years and have yields of 4.529% to 7.175%.
Bloomberg: – Pimco says Brazil, South Africa best for emerging bonds. – Brazil, South Africa and Mexico are the best emerging markets to buy local-currency bonds because they offer higher yields than the debt of developed nations, according to Pacific Investment Management Co., manager of the world’s biggest bond fund.
WSJ: – Banks like munis; mom-and-pop investors don’t. – Bankers are increasingly turning to municipal bonds to protect their profit margins from declining interest rates—just as mom-and-pop investors, the largest holders of such securities, are becoming more reluctant to buy them.
Bard Luippold - Fixed income positioning in a rising rate environment – An overview of where value may lie in the different segments of the bond market.
Governing: – Muni bonds need State, local governments to fight for them. – Tax-exempt municipal bonds, which finance infrastructure projects at the state and local level, have been targeted by policymakers looking to boost tax revenue. But advocates for state and local governments argue that tacking on more costs to the bonds would push some investors out of the market, making it tougher for governments to secure financing.
Cate Long: – Credit Default Swaps in muniland. – There is very little volume in muni CDS trading; most of it is done between dealers. Essentially it’s an artificial market with very few trades outside the dealer community.
Reuters: – S&P updates criteria on ‘CCC+’, ‘CCC’, ‘CCC-’, ‘CC’ ratings. – Standard & Poor’s Ratings Services is updating its criteria for assigning ‘CCC+’, ‘CCC’, ‘CCC-’, and ‘CC’ ratings, according to a published article titled “Criteria For Assigning ‘CCC+’, ‘CCC’, ‘CCC-’, And ‘CC’ Ratings.”
NASDAQ: – 7 Years of Famine Hits Fixed Income Investors. – What’s happening to today’s income investor reminds me about the seven years of famine explained in the Bible book of Genesis. Back then, seven years of feasting were followed by seven years of famine, which extended through the ancient Middle East. What about today’s famine?
The Basis Point: – How long will investors hold onto low yielding Mortgage Backed Securities? – Many investors have begun moving away from government backed securities toward more risky investments to generate returns. Unfortunately, there’s no free lunch when yields are so low.
Learn Bonds: – Gundlach: Gets Robbed, Gets Thieves, and Gets 5 Star Rating. – Jeff Gundlach has had an eventful few days. First his house was burglarized and valuable paintings stolen, then he offered a reward for the safe return of the paintings, which were subsequently recovered and now we’ve awarded his DoubleLine Total Return Bond Fund a five star rating.
Bond Squawk: – Subdued rise in core prices questions jump in inflation expectations. – The Great Recession was not your typical economic recession so why should the recovery be a normal one? Hence in the context of economic theory, all else is far from equal. As a result, one has to wonder the sustainability of the rise in inflation expectations and the mounting criticism of the Federal Reserve and central banks from around the world.
ETF Trends: – Muni Bond ETFs: Red Light, Green Light. – The secondary market seems poised for municipal bond prices to move higher. Dealers appear comfortable with current municipal market levels and we have seen increased interest in the shorter end of the curve.
Gross:Givn boomer demograhpcs, QE focus on unemplymnt & globl reflatin; Inflatin risks ocur in “out” years,not near term.Sell longterm bonds
— PIMCO (@PIMCO) October 3, 2012
Spread on 5% cpn 30yr Puerto Rico elec pwr auth #bonds to MMA 5% AAA Benchmark shows considerable widening all Fall (1 of 2)
— Muni Market Advisors (@Muni_Mkt_Advis) October 3, 2012
— Cate Long (@cate_long) October 3, 2012
If so, it’s extremely hard to game whether the muni market wins or loses. “Doomsday threat” of outright taxation goes away, but…
— Mike Stanton (@MikeStanton1891) October 3, 2012