To get the Best of the Bond Market delivered to your email daily click here.
FT: – Curb your expectations, warns Pimco’s El-Erian. – Tough times lie ahead for investors and fund managers in an uncertain environment. The U.S. Federal Reserve may ease its emergency bond-buying programme, global economic growth is tepid and markets are volatile.
Christopher Lum Lee: – Reasons to not ditch your corporate bonds. – One reason for keeping corporate bonds in your portfolio is that now is the time that you can capitalize on the mass movement out of bonds and into stocks – specifically by lower principal price and that you’ll be able to collect dividends while you wait for another rotation out of stocks and back into bonds – bringing you principal appreciation as well.
CNBC: – Investors swap vulnerable bonds for property. – A record amount of money poured out of bond funds last month as a spike in global bond yields spooked investors. According to asset managers, property has mopped up a decent amount of the proceeds.
Learn Bonds: – Brand new defined-maturity bond ETFs to consider. – When it comes to defined-maturity corporate bond ETFs, Guggenheim’s BulletShares have been the go-to place for investors. In an environment in which many investors fear rising rates but also aren’t willing or able to create a diversified portfolio of individual bonds, corporate bond funds designed to behave like individual bonds seem like a great idea. It is such a good idea that BlackRock now wants in.
Detroit Free Press: – Detroit GO bond holders will suffer the most from Kevyn Orr’s proposal. – Much has been said and written about emergency manager Kevyn Orr’s plan to save Detroit from financial ruin. Too little, we believe, has been said on behalf of the thousands of investors in Detroit general obligation (GO) bonds.
Euromoney: – Muni market braced for fallout from Detroit. – Potential bankruptcy would be largest in market’s history; Observers divided on contagion risk.
Bloomberg: – Detroit creditors get new worry in Alabama fee ruling. – Detroit bondholders may have a new worry after a judge ruled that Jefferson County, Alabama, could have paid legal bills for its bankruptcy from cash that was going to pay warrant holders owed $3 billion.
Detroit News: – Orr reaches ‘important settlement’ with Detroit creditors. – Emergency Manager Kevyn Orr has reached an “important settlement” with creditors after a month of talks aimed at restructuring as much as $20 billion in debt and long-term liabilities.
MarketWatch: – 5 bubbles investors need to watch. – Investors need to be wary of emerging markets, Bitcoins and junk bonds.
Business Insider: – How mortgage bonds are made. – How do mortgages make it to Wall Street anyway?
Investment News: – Yields to yield as bond market finds its equilibrium. – Leveling off of term premium suggests worst is over for Treasury holders.
Investorplace: – Vanguard muni bond funds: 2 buys & 1 hold. – Whether tax-free or taxable, my general take on bonds and bond funds remains consistent. First, I expect that returns will be muted in the years ahead, given the starting yields we’re buying bonds at today. Also, I remain leery of long-maturity bonds, given their extra sensitivity to rising interest rates. And finally, despite these caveats, bonds still have a role to play in a balanced portfolio.
FT Adviser: – Trade of the week: Fixed income. – The U.S. Treasury market has reacted strongly to the possible slowing in bond purchases with a knock-on effect on asset class valuations. After this significant adjustment, some bond valuations are no longer quite as expensive.
Donald Van Deventer: – Mortgage valuation yield curve and U.S. Treasury forecast up 0.17% from last week. – Today’s forecast for the mortgage valuation yield curve and for U.S. Treasury yields is sharply higher on the long end of the curve than last week’s forecast. We project the 10 year Treasury yield will rise from 2.60% at Thursday’s close to almost 4.42% in 2023, up more than 17 basis points from last week.
Your Money: – Should investors abandon bonds? – Investors’ love of bonds cooled recently after the U.S. confirmed it would soon start to wind down its quantitative easing programme. But should you abandon ship following the recent frenzied sell-off in bond markets?
Barron’s: – Barclays sees risk in government bonds, fair value in high yield. – Barlcays today cautions that the interest-rate risk in high-grade bonds might not be worth the paltry returns it sees ahead. Barclays does see value in corporate bonds after they’ve cheapened over the past two months in sympathy with rising rates without seeing much compression in credit spreads.
Barron’s: – JP Morgan: Bullish on corporate bonds, neutral on duration. – While Barclays sees better value in junk bonds, JP Morgan prefers investment-grade corporates and sees more risk in high-yield right now.
Gross: #Twinkies are back on Monday & bonds are too – with a longer shelf life than last April. Stock 5-10 yr. maturities in your pantry.
— PIMCO (@PIMCO) July 14, 2013
— PIMCO (@PIMCO) July 15, 2013
Gundlach buying hundreds of millions of deep out of the money inverse supports in June -big bet on lower rates or else just super long bonds
— David Schawel (@DavidSchawel) July 15, 2013