Bonds Throw Taper Tantrum…TIPS Are Still Bonds…The All Powerful Fed…and more!


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MarketWatch: – Bonds throw ‘taper tantrum’ and fund buyers break. – Investors in bond mutual funds will have to tread carefully heading into the second half of the year.

Minyanville: – TIPS are still bonds: An ongoing lesson. – Do not become so fixated on inflation risk that you forget all about interest rate risk.

Econbrowser: – The all-powerful Fed. – The conventional wisdom is that the big jump in interest rates since the beginning of May is the result of a poorly conceived or poorly communicated shift in policy by the U.S. Federal Reserve. The conventional wisdom is wrong.

Learn Bonds: – Rising bond yields are a dream come true. – For quite some time, I’ve worried that the U.S. bond market would be mired in a Japanese-like experience of persistently low historic rates. Therefore, the recent rise (and I hope continued rise) in benchmark yields is a dream come true. It allows individual bond investors to look beyond the noise of fears about QE tapering and start to gradually buy longer-term single-A- and triple-B rated bonds in the 5% to 7% range.

Rick Ferri: – Solving the bond ETF discount problem. – Bond exchange-traded funds can be tricky to trade at times. Although these securities trade within a reasonable range of their net-asset value (NAV) most days, there are those periods when the ETF market just doesn’t want to cooperate. Last week was a good example. Here are two ways to solve this problem.

IFR: – Corporate debt to dominate EM trading. – Corporate debt is poised to dominate emerging markets’ external debt trading in spite of its higher vulnerability to bouts of volatility, according to ING.

Barron’s: – Where to invest in bonds now. – The thirty-year bull market in bonds hasn’t been unwound by a two-month rise in rates, but some areas of the fixed-income market have regained some attractiveness.

MarketWatch: – Don’t abandon bonds, celebrate higher rates. – Carefully crafted titles designed to strike doubt into the hearts of individual investors is usually the norm. However, anyone surfing the web lately has been enamored with commentary over the future of interest rates, and the Federal Reserve’s plan of attack. It’s no wonder so many weak hands shook loose from their fairly valued bond funds lately. At this juncture, income investors need to keep their perspective in touch with the various alternatives.

Investing Daily: – A better way to high yield. – The first half of the year wrapped up last week in a way that is probably a bit different than how it was imagined six months ago.

FT: – Investors move out of cash and into bonds. – Investors switched billions of dollars out of the safety of cash into bonds as well as equity funds in the first half of this year, before the U.S. Federal Reserve created market uncertainty by hinting at a possible slowdown in quantitative easing.

Morningstar: – In a rising rate environment, is it safer to hold individual bonds or bond funds? – Market pundits have been expecting interest rates to rise for the last several years. When rates rise, many investors seem to think that bond funds are worse than individual bonds. The thinking goes that since you can hold an individual bond until maturity, you’re insulated from the effects of rising interest rates and can avoid taking any losses. A typical bond fund doesn’t hold bonds until maturity, forcing it to take losses after interest rates rise.

Bloomberg: – Nowhere to hide in worst bond losses since 2008. – Investors are finding no shelter from the worst corporate-bond losses in almost five years as debt plunges for the most creditworthy to the riskiest borrowers in every industry worldwide.

Bill Gross: – De-risking and finding value — PIMCO’s Bill Gross. – Bill Gross describes PIMCO’s risk strategies in the current market. Watch video.

Bill Gross: – Why bonds remain an important anchor in portfolios. – Bill Gross explains why bonds remain an important portfolio anchor.

Bill Gross: – Forecast for near-term volatility — PIMCO’s Bill Gross. – PIMCO’s Bill Gross sees near-term volatility.

Bloomberg: – Who goes to cash shows extent bonds will become bear market. – Investors who poured $1.26 trillion into bond funds in the past six years pulled out record amounts of cash last month, leaving the world’s biggest fixed-income managers struggling to stem the flow.

Jeroen Blokland: – Have bond yields risen too much? – Now that the 10-year bond yield has crossed the 2.50% threshold for the first time since August 2011, has it gone too far?

Andrew Keene: – Bond market downturn is as inevitable as Fed tapering. – There is a notable reluctance among investors to buy into the bond market at this point despite sentiments expressed by several institutions suggesting that this week’s downtrend is merely a dip.

Bonddad Blog: – Don’t expect a bond market rout. – We’ve now had a few weeks to digest the Fed’s statement that they were thinking of removing the QE program. Let’s take a step back and get an idea for what has happened.

Minyanville: – Bond market’s memo to the Fed: This is not a misunderstanding, this is a blow-up. – By focusing on price movement as a misinterpretation of policy, Fed officials are making it clear they don’t understand there’s a liquidation going on — and this is a growing risk factor.

Bloomberg: – Buy signal seen in worst losses since Whitney panic. – The biggest losses in municipal bonds since 2010 are signaling to investors at Cumberland Advisors and Wells Capital Management that tax-exempt debt is set to rebound.



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