Best of the Bond Market for July 17th, 2012
FT: Treasuries Defy the Bond Bears as Demand Hits Record Levels – The response from investors and foreign central banks has been unequivocal. The rise in their holdings of US Treasury debt has, contrary to fears a year ago, reinforced its status as one of the few remaining haven assets amid concerns over slowing global growth and an intensifying eurozone crisis.
Sober Look: The 5 Year Treasury Hits a Record Low Yield – Driven by the full realization that we are in a global slowdown, the 5-year hit a record low today of just under 0.6%, following a decline that has been ongoing for decades.
Learn Bonds: US Treasuries and the Safe Haven Flows Myth - Both, Brett Wander and Michael Pietronico indicated that the impact of US Treasuries being a global investment safe haven was limited to the longer end of the yield curve and reduced yields by less than half a percent.
MarketWatch: QE3 is pointless as we head over the cliff – The impact of these tax hikes and spending cuts would undoubtedly be another recession, with another million or two people losing their jobs. That’s a recession that the Fed can’t stop, or even cushion, with quantitative easing, or QE3.
Reuters: Bonds fall as Bernanke mum on new Fed action – U.S. government debt prices fell on Tuesday as Federal Reserve Chairman Ben Bernanke said the central bank stands ready to respond to a slowing U.S. economy but gave few details on future Fed actions.
ETF Trends: The Leveraged Inverse Treasury ETF TBT is Down 55% so Far this Year - The leveraged ETF has been mauled by falling Treasury yields and higher bond prices.
Bloomberg: Illinois Jobless-Debt Sale Buoyed By Lowest Yields – Illinois is set to pay close to a record-low yield on a bond sale this week, even as it contends with the nation’s worst-funded pension system and as much as $8 billion in unpaid bills.
Research Puzzle Pic: Closed End Fund Con Job – where capital is returned to shareholders of some funds in a way that convinces them that they are receiving high yields on their investment.
The Sacramento Bee: CalPERS Earnings Fall Way Short - The 1 percent gain was well below CalPERS’ 7.5 percent official forecast and will likely prompt the nation’s largest public pension fund to impose higher contribution rates on the state and participating municipalities.
Rajiv Tarigopula: Long-Term Muni Bonds With Near 6% Yields – For investors seeking relatively safe long-term yields in municipal fixed-income securities, four recent offerings of California public education and general bonds are worth a closer glance.
New Oak Capital: Puerto Rico Municipal Bonds Do Not Reflect Their Risk – NewOak believes that the level of expenditure observed in Puerto Rico is unsustainable given their structurally flawed economy. The chance of Puerto Rico defaulting on their debt may be slim…but right now, the yields are not high enough to justify holding these bonds.
T-bills in high demand: foreign investors increased holdings by $8.3bn. Top 2 holders of Treas (China, Japan) increased holdings
— Taylor Riggs (@TaylorRiggs_BB) July 17, 2012
— Cate Long (@cate_long) July 17, 2012
Fed could have multiple operations going at the same time: QE with a twist of Ts.
— Ed Bradford (@Fullcarry) July 17, 2012