Bond Market Adjustment Too Extreme…Treasurys Now a Ponzi Market….What to Do With Ugly Dog Bond Funds… and more!

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The Big Picture: – The bond market and inflation. – For the last few weeks we have seen bonds selling off viciously as a result of confusing communications from the major central banks. Bonds may be reacting to some changes in inflation expectations, but the inflation evidence does not support this view. In our opinion the bond market adjustment is too extreme and has created bargains in bonds.

Barron’s: – Treasuries now a ‘Ponzi Market’ – Guggenheim CIO. – We’ve heard various riffs on how the Federal Reserve is distorting the Treasury market, but someone’s finally gone far enough to call that market a Ponzi scheme.

CNBC: – As markets churn, bond funds start ugly dog contest. – What to do with your bond and emerging market funds? It’s the question I’ve been asked most often in the past two weeks. With further declines in prices today, it’s starting to look ugly. The numbers look since the beginning of May certainly aren’t pretty.

Learn Bonds:  – Should you buy Stanford or Apple bonds? – Some investors may be deliberating long-term bonds for many reasons, though the decision is tough because there is a likelihood (or should I say certainty) low coupon, long-term bonds will lose value as treasury rates go up. Nevertheless some investors may have specific reasons to allocate to low yield, high credit quality fixed income in the next few months — they may be looking for something “safe.” With that in mind here’s an in depth look at the investment grade bonds of Apple AA+ and Stanford AAA.

Bloomberg –  JPMorgan to Barclays ushering bond buyers into equities. – Wall Street’s biggest bond dealers are telling clients to shift from most fixed-income markets into U.S. stocks as deepening concern the Federal Reserve will pare unprecedented stimulus fuels the worst debt losses since 2011.

Trustnet: – Why there’s no need to fear a 1994-style crash in bonds. – Enzo Puntillo of the Julius Baer Total Return Bond fund says investors will wonder what all the fuss was about when they look back on this period 18 months from now.

MarketWatch: – The junk bond market ‘hasn’t come down to earth’. – High-yield bond guru Marty Fridson still thinks his sector is overpriced. The rigorous researcher of junk bonds said as much to a cohort of high-yield research analysts from hedge funds, banks, and asset managers during the New York Society of Security Analysts’ 23rd Annual High Yield Bond Conference.

Reuters: – Moody’s cuts Detroit bond ratings on bankruptcy risk. – Moody’s Investors Service on Thursday pushed the credit ratings on nearly $8.4 billion of Detroit bonds deeper into the junk category over heightened risks the city could file for bankruptcy, undergo a major debt restructuring or do a combination of both.

Bloomberg: – Detroit yielding 16% drives Nuveen bet on repayment. – Nuveen Asset Management, the second-biggest owner of Detroit’s debt, is betting emergency financial manager Kevyn Orr will come up with a recovery plan that repays bondholders in full.

IFR: – Bonds on sale but still too dear. – Sometimes, as with Treasury bonds right now, a better deal just isn’t good enough. A sharp selloff in Treasuries has taken yields higher, theoretically offering better returns and better protection against inflation. In fact, so-called real yields, meaning yield adjusted for inflation, have actually gone into positive territory.

The Telegraph: – A ‘disorderly’ bursting of biggest bond bubble in history is biggest risk to financial stability, say BoE’s Andy Haldane. – Andy Haldane, the Bank of England’s executive director for financial stability, believes the biggest risk to the global financial system is a “disorderly” bursting of the bond bubble created by quantitative easing.

CNBC: – Not all bonds are created equal. – Global bonds offer an alternative to low interest rates in U.S. Treasuries, Legg Mason’s Steve Smith said Thursday.

Eric Parnell: – The death of bonds is greatly exaggerated. – The bond bubble has burst and the 30-year bull market in bonds is finally over. Or so it would seem based on the flood of recent commentary from the financial media and press. While it has certainly been a most difficult stretch for bonds since the beginning of May, it is still far too premature to declare that the end is finally upon us for the bond market.

Trustnet: – It’s the beginning of the end for bonds. – The recent drop in the price of government debt could signal the piercing of the “bond bubble”, according to TM Darwin Multi Asset fund manager David Jane.

Ploutos: – A lesson to be had in Apple’s bonds. – The price volatility of Apple’s May 4, 2043, issue brought on April 30 of this year has proved to be just as volatile as its stock. Ploutos, looks at the underlying cause.

ETF Daily News: – Big day for the high yield corporate bond ETF (HYG). – High yield bonds have been getting a lot of attention lately. Between historically low yields and record high prices, these “junk” bonds are looking less junky by the minute. But while some investors don’t feel the reward is worth the risk, others believe there are still some compelling reasons to hold high yield. It was against this backdrop that on Tuesday June 4th, the iShares High Yield Corporate Bond ETF (NYSEARCA:HYG) – the largest ETF in its category – experienced its biggest trading day ever.

WSJ: – Unilabs stops high yield bond on unfavorable market conditions. – Unilabs, a European medical diagnostic company, has postponed its bond issue due to unfavorable market conditions, in a sign that nervousness about the U.S. stimulus program gripping government bond markets have now spread to European corporate bonds.

Global Research: – US Treasury bonds are junk bonds? – Is America Defaulting on Its Sovereign Debt? Can You Trust the Wall Street Credit Rating Agencies?


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