Romney/Ryan combo bad for muni’s?….CA and Greece…64% return potential…and more!


Best of the Bond Market for August 14th, 2012 

WSJ: Neither Mitt Romney nor his advisers have said they will not touch the municipal bond interest exclusion – Nowhere do Mitt Romney or his advisers say that these deductions can’t be touched. Senior economic adviser Glenn Hubbard says these deductions are definitely “on the table.”

The Atlantic: 5 Graphs showing how California is nothing like Greece, Spain or Italy. –  If anything, Greece, Spain, and Italy would love to be in as good shape as California right now.

SumZero: A potential 64% upside in ATPG second lien notes – The Company has an attractive portfolio of offshore oil and gas assets that was beset by liquidity issues and an unhealthy capital structure. A restructuring should provide much needed liquidity and capital structure relief.

Learn Bonds: The financial media missed Bill Gross’s point – his piece was really about inflation.

Index Universe: Thinking about using leveraged ETFs to short the bond market? The SEC says think again.  – The problem with many such securities is that they rebalance daily, making their returns diverge dramatically from their indexes.

FT: The cost of insuring against defaults by some of the world’s largest banks is falling – The average cost investors are paying to buy default protection on debt issued by Bank of America, Citigroup, JPMorgan Chase and Wells Fargo has now fallen to levels last seen in May.

Businessweek: Junk bond liquidity is important, especially on the way out. –  Investors are accepting 1.2 percentage points less in yield to own bonds from bigger, newer U.S. high-yield offerings that are more actively traded and easier to dispose of than older, smaller issues, according to Barclays Plc (BARC) data.

City Journal: It seems there is no scaring the muni bond bulls –  Today, investors in bonds—municipal bonds, anyway—don’t scare anyone, mostly because they themselves refuse to be scared even by mounting risk.

The Big Picture: Stocks vs. Bonds. vs. Gold Chart for 2010-2012

Barrons: JP Morgan analysts say both investment grade and high yield bonds still have room to run – “In such an environment of weak growth and stimulative central banks, market technicals, and a broad-based quest for carry in a low-yield environment will remain the dominant undercurrent driving markets,”

CNBC Video: The CEO of municipal bond insurer Assured Guaranty on the fight in Stockton CA

FT: High Yield muni bond investors should look before they jump – Many high-yield issuers are small and thinly traded, making it difficult to sell when trouble arises.

Balance Junky: Two opposing views on the direction of the US Treasury market – Good summary of the recent long argument from Hoisington investment management and the short argument from Doug Kass.



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