Best of the Bond Market for September 24th, 2012
Bloomberg: – Romney plan giving state-local bondholders anxiety. – Tax proposals from Republican presidential candidate Mitt Romney would help drive municipal yields to the highest level since March by ending the debt’s tax advantage at lower income levels, Morgan Stanley estimates.
Business Insider: – Jeff Gundlach is going ‘RANSOM’: Prepares to host press conference on the massive theft of his art. Jeff Gundlach holds press conference on his recent robbery.
Barrons: – CEO Spotlight Jeff Gundlach - Barron’s uses the recent robbery of Jeff Gundlach to rerun a slightly amended version of their new bond king story from earlier this year.
Sober Look: Retail investors dive head first into syndicated loans - They like them because they are floating rate, so if inflation picks up they offer some protection, and because they are senior secured meaning there is more protection than with high yield bonds.
MarketWatch: – Pimco’s Bill Gross’s bet on munis paying off. – The manager of one of the world’s biggest bond funds has done fairly well investing in municipal bonds. And he’s not alone. The asset class has returned 6.08% so far this year, according to an index compiled by Bank of America Merrill Lynch. That’s much more than U.S. Treasury bonds, which have returned 1.7%.
Zero Hedge: Goldman study shows ETFs as a driver of bond returns – Study tracking the performance of bonds held in portfolios of ETFs vs. those that are not show significant differences in performance, among same type of bond with same maturity etc.
Rick Ferri: The questions of bonds vs bond funds depends on what you are trying to accomplish - Individual bonds work well when you have a lump sum set aside for a known purpose at a known future date and you cannot afford to take any principal risk. Bond funds work well when you’re accumulating for a general purpose over the long-term and plan to distribute this money slowly in the future.
Mutual Fund Wire: DoubleLineCapital estimated to be worth between $450 and $650 Million - not bad for a company started in late 2009.
Reuters: – Ban on ‘masking’ muni prices to take effect Nov. 1. – Underwriters in the $3.7 trillion U.S. municipal bond market will be banned from keeping important pricing information on new debt sales from market participants as of Nov. 1, the Municipal Securities Rulemaking Board said on Monday.
Learn Bonds: – Negative returns on CDs! junk bonds paying under 10%! What’s an investor to do? – I knew all the individual numbers but, I did not put it together until I read Philip Brewer’s article “Savings Rates below Inflation, Save Anyway”. Do CDs really have negative returns?
Washington Post: How the market’s have reacted to QE3 so far – Mortgage rates have not fallen much, inflation expectations are up, commodity prices are basically flat, dollar is weaker, and stock market too early to tell.
Bond Buyer: Commercial Banks are snapping up municipal bonds - Industry watchers posit different opinions as to why this is so. Relaxed tax rules during the economic downturn in 2009 and 2010 freed up U.S.-chartered depository institutions, as they are categorized in the Fed report, to invest more in tax-exempt securities.
WSJ: – U.S. Corporate Bond Tally Could Top $100 Billion in September. – U.S. corporate bond issuance looks set to top $100 billion for September, only the third time it has crossed that monthly threshold since at least 1995, according to data provider Dealogic.
Zero Hedge: – America’s deadliest and poorest city set to disband its entire police force over budget crisis. – Camden, NJ has the reputation of America’s deadliest city and things are about to get a lot worse as city officials propose scrapping the police force.
Financial News: – Want a fixed-income investment opportunity? Try high-yield bonds. – Government bond yields are low, and investors aren’t getting paid much more for owning investment-grade corporate bonds either. How can investors achieve growth within fixed-income portfolios?
— Cate Long (@cate_long) September 24, 2012
Gross: How many Treasuries you own is not the question.How many 3 and 3.5% 30 year mtges is.Own mortgages.
— PIMCO (@PIMCO) September 24, 2012
Friday retail orders on Cal GOs totaled $810MM; subtracting over-subscriptions, the state put away $616MM of #munis, or 40% of the deal
— Muni Market Advisors (@Muni_Mkt_Advis) September 24, 2012
Mom & pop investors snapping up California bonds, which they don’t have to pay taxes on, ahead of possible income tax hikes on Nov. ballot
— Michael Marois (@MichaelMarois) September 24, 2012
— Cate Long (@cate_long) September 24, 2012