Best of the Bond Market for September 10th, 2012
Business Insider: The Stalwart says no QE3 this week – 6 reasons he predicts the Fed will not announce another round of QE at this week’s meeting.
Bloomberg: A gauge of indicators of market expectations for additional central bank stimulus rose to a record 99 percent in August – The measure increased to 82 percent in the months before QE2 in November 2010.
CNN Money: – U.S. Treasuries could become the next flash crash victim. – The enormous size of the Treasuries market makes it appealing to firms that make money from huge volumes of trades. As with stocks, the fear is that flash crashes could cause sharp plunges in Treasury prices. That would cause 10 year long term yields to soar from all-time lows below 1.5%, to as high as 4%.
Rick Ferri: Bill Gross tells investors to say no to high advisor fees - “It’s as if technology gains have bypassed the adviser industry. Even the best lunches in the best restaurants are not worth a 1.0 percent annual fee.”
Penn Law: Creating a new chapter for states in U.S. bankruptcy law - So long as a state can’t be thrown into bankruptcy against its will, and bankruptcy doesn’t usurp state lawmaking powers, bankruptcy-for-states can easily be squared with the Constitution.
Felix Salmon: A possible way out for Poway - another recent bond deal may provide a roadmap for the Poway California School District to get out of the bond deal they did. This was the one where they are paying $1 Billion to borrow $100 Million.
ETF Trends: – A tale of two high-yield ETFs. – Investors have snapped up junk bond ETFs this year to boost yield but the funds can perform differently based on the credit quality of the debt they hold. We take a look at two high profile junk bond ETFs to see how this could play out.
Bond Buyer: – Alternative Minimum Tax (AMT) bonds set to take off in airports splurge. – After plunging during the financial crisis, the issuance of municipal bonds subject to the alternative minimum tax (AMT) is slowly rebounding, with airports leading the way.
BusinessWeek: – Vadnais Heights Breaks Pledge in Downgrade Debacle. – A $25 million sports complex that wasn’t supposed to cost taxpayers money has left a Minneapolis suburb on the hook for about a third of its annual budget and with a credit rating 12 levels lower than it was in July.
Learn Bonds: – The “risk tolerance” mistake that could lead you to financial disaster. – Trying to determine your risk tolerance is fraught with danger, because it’s qualitative in nature. I might describe my risk tolerance as a “high” and so might you. However, we both may have different interpretations of what a high risk tolerance means. So should you forget about trying to determine your risk tolerance?
Index Universe: – Van Eck to add emerging market bond ETFs. – Van Eck Global, the New York-based fund manager behind the Market Vectors ETFs, filed paperwork with U.S. regulators to market two more emerging market bond funds that would go head-to-head with some sizable competition from providers such as WisdomTree and iShares.
Reuters: – U.S. corporate bond new issues. – The following are lists of upcoming high-grade and high-yield corporate bond offerings in the United States. The information was gathered from Thomson Reuters U.S. new issues team, and other market sources.
LA Times: – Land-use disputes can put cities on shaky financial ground. – Mammoth Lakes hardly fits the profile of other cities that have recently plunged into bankruptcy. It wasn’t pensions or plummeting property values or questionable accounting practices that pushed the tiny mountain resort town over the edge: It was a $43-million court judgment in a lawsuit brought by a developer after the town tried to back out of an agreement.
Gross:Bond Investors–yield curves 2 be very steep in US&Euroland 4 a very long time. Reflation underway. Low short rates; higher long rates
— PIMCO (@PIMCO) September 10, 2012
in preliminary pricing, yield lowered as much as 7bps from retail pricing this morning.
— Taylor Riggs (@TaylorRiggs_BB) September 10, 2012
— Cate Long (@cate_long) September 10, 2012