Research Puzzle Pix: It wasn’t that long ago that Greek Debt was yielding less than US Debt – As people sat down to Thanksgiving dinner in 2006, things seemed pretty quiet. While it is hard to believe now, at the time all of the benchmark ten-year yields for the European countries in the chart were below that of the United States.
The Big Picture: The US budget deficit is actually falling fast – “From fiscal 2009 to fiscal 2012, the deficit shrank 3.1 percentage points, from 10.1% to 7.0% of GDP.”
Bondsquawk: Riding the yield curve in EOG Resources – The EOG 6-Year pays a semi-annual coupon of 6.875% and matures on October 01, 2018 (CUSIP 26875PAC5). The bond is a senior note and is a straight bullet maturity with no embedded early call feature. So the earliest an investor will get back its principal is at the maturity date, assuming no default. These senior notes are currently being offered at a dollar price of $128.47 which translates to a yield to maturity of 1.74%.
Learn Bonds: 3 Reasons your portfolio needs more emerging market exposure – Emerging Markets will soon represent more than 50% of world GDP. Emerging and Developing Economies Account for the Majority of the Growth. Developing and Emerging Markets have the lowest debt loads.
ETF Trends: The LEMB Emerging Markets Broad Local Currency Bond ETF is worth a look – Currently, top holdings of LEMB involve sovereign issues from Brazil (11.71%) South Korea (9.49%), and Turkey (3.50%), and other Emerging economies including the likes of Malaysia, Hungary, Israel, South Africa, Colombia, Mexico, Poland, Russia, Thailand, Indonesia, Philippines, and the Czech Republic for instance.
The Big Picture: More people acting like the bond market bear call is new – Whenever we see stories warning of the risks in bonds, as if the subject has never been discussed, we want to remind everyone that this is the only thing that has been said about the bond market for many years. And, it has been wrong for many years.
Zero Hedge: Where all that corporate cash on the sidelines is actually going – not only are companies using up what actual free cash flows they have for such stupid stock boosting gimmicks such as harebrained M&A (just look at the recent fiasco between HP and Autonomy to see how rushed M&A always ends), and of course buybacks, but they are now levering to the hilt to do even more of this.
FT: Liquidity is going to be a problem if bond fund investors rush for the exits – In the wake of the financial crisis, with tougher capital standards under Basel III making it more expensive to hold corporate debt and the pending Volcker rule making it harder for US banks to trade on their own accounts liquidity has fallen dramatically.
Zacks: 3 bond ETFs with little or no interest rate risk – FLOT, BIL, and PVI
TF Market Advisors: Why its hard not to be bullish – What I took away from yesterday’s meeting is that he will continue to keep money easy far longer than I thought. Maybe it is 6.5% unemployment that is his real target. Maybe he will argue that inflation even at 3% is transitory. I have underestimated how bullish the bull case could be.
St. Louis Fed: All the interest rate data you could ever want – (except muni’s)
CS: 38% of US corporations either cancelled or postponed specific projects in response to fiscal cliff concerns
— David Schawel (@DavidSchawel) November 21, 2012
the Evel Knievel style drop in the bond rating of a school district in Idaho speaks directly to the perils of relying on the rating agencies
— Michael Pietronico (@MillerTabak) November 21, 2012
Great interview @TheStalwart with CR: "I’m not a roaring bull, but looking forward, this is the best shape we’ve been in since ’97."
— Ed Bradford (@Fullcarry) November 21, 2012