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FT: – The Fed has turned markets upside down. – Investors in the Treasury market today are not there for the income but for the prospective capital gain should yields decline.
The Economist: – The bad news of rising real yields. – An inevitable consequence of the falling inflation and rising bond yields. The U.S. and eurozone are no longer inflating away their debt. One aim of Abenomics is surely to drive down real yields by allowing inflation to rise to 2% without a concomitant rise in nominal bond yields, which would make the financing of government debt look perilous.
Quartz: – People are now running from bonds. Running. – The financial crisis upended a lot of things about the established order. Swaggering bankers were brought to their knees. Spendthrift Americans started saving—briefly. A decades long deregulatory fetish in Washington fell out of fashion. And people started dumping stocks, and buying bonds. But that was then, and times are changing.
Learn Bonds: – One way to find value in today’s low-rate environment. – Despite the rise in benchmark Treasury rates during the month of May, it is still difficult to find the corporate bond market wildly attractive at today’s levels. With market-wide spreads still at less-than-attractive levels and broader-market yields not far off all-time lows, it is quite challenging to find a lot of value. But it can be done.
Jari Ulmer: – The perplexing convexity of rates, bonds and bond funds. – It should go without saying that Bond Exchange Trade Funds (ETFs) are not bonds. Even Maturity-Targeted Bond ETFs, which actually hold bonds until they expire, are not bonds. In a world where rates never changed the differences between these might be negligible, but they do change. When they do, and how that affects the price and yield of the $100B+ bond fund market is more complex than most investors are probably aware.
Alliance Bernstein: – Detroit municipal bonds: Who’ll share the pain? – It could be several weeks or a few months. But before long, the city of Detroit is likely to default on some of its outstanding bonds and possibly file for Chapter 9 bankruptcy protection. It would be a historic bankruptcy and is sure to create uncertainty in the municipal bond market. Some types of debt will fare better than others in the final restructuring.
Bloomberg: – Local debt beating Treasuries for longest since ’06. – The $3.7 trillion municipal market is at risk of ending its longest streak of gains in 20 years. It’s still winning when compared with other fixed-income assets.
Joseph Stuber: – The paradigm shift has begun – This isn’t going to be pretty. – There’s ample evidence of late that the Fed is trying to talk investors into moving back away from the edge of the cliff. My personal opinion is they are a little late and that opinion is based almost entirely on the structural flaws in the market today that leave very little dry powder left – in other words, there isn’t enough money on the sidelines to backstop a high volume sell-off.
Barron’s: – High-yield ETF short interest has suddenly rocketed. – What’s going on in junk-bond exchange-traded funds’ short interest makes a person wonder just how ugly traders think it’s going to get. Markit data show a big leap in short interest in SPDR Barclays Capital High Yield Bond ETF and a smaller but not insignificant rise in the same for iShares iBoxx $ High Yield Corporate Bond Fund over the last several sessions.
Minyanville: – Corporate bond spreads and the bond orgy. – Current headlines do not reflect the type of behavior and attitudes seen at the end of a credit cycle.
MarketWatch: – Muni-bond purchase fees sting retirees. – In what may turn out to be a boon for the many retirees who rely on them for income, yields on municipal bonds are increasing. But investors thinking about jumping in the muni pool need to recognize that the “markup” on some products can be much larger – and more painful – than they realize.
Bloomberg: – Jim O’Neill says get used to U.S. bond yields nearer 4% than 2%. – Investors should get used to U.S. Treasury yields rising toward 4 percent as the 30-year bull market in bonds comes to an end, according to Jim O’Neill, former chairman of Goldman Sachs Asset Management.
FT: – Investors too anxious about corporate bond risk. – High-yield bond manager says investors are too jittery about corporate bonds in spite of corporate balance sheets remaining a ‘bright spot’.
Bond Buyer: – Meredith Whitney: ‘I never focused on the muni market’. – Two-and-a-half years after financial banking analyst Meredith Whitney wreaked havoc in the municipal market by erroneously predicting hundreds of billions of dollars of defaults, she now says she never focused on munis.
Alliance Bernstein: – Adding global bonds to target-date funds. – Within US defined contribution (DC) target-date funds (TDFs), whether we’re considering customized TDFs for larger plans or packaged solutions for smaller plans, our research shows that having a bond allocation that is not US-centric can lead to better outcomes and enhance the effectiveness of the glide path.
FT: – Apple bonds lose 9% in six weeks. – Investors are nursing losses of up to 9 per cent on Apple’s record-breaking $17bn bond offering, less than six weeks after the securities landed in their portfolios.
Market Oracle: – U.S. bond market – If there’s a time to panic… It’s now. – Some asked if it was really that big a deal that bonds fell by 2% in May. The answer is yes. It is a big deal, especially when 10-year Treasurys yielded just 1.7% a month ago. That slight sell-off erased more than a year’s worth of interest.
Reuters: – Central Bank fears trigger global selloff in bonds, shares. – The yen rose while shares, bonds and gold fell on Tuesday as investors retreated into cash, unnerved by fears that major central banks are cooling in their commitment to the money-pumping that has buoyed global markets.
FT: – Investors’ rude education in bond market maths. – Will Apple’s $17bn debt sale in April turn out to be the “AOL buys Time Warner”moment of the three-decade bond market bull run?
MarketWatch: – TIPS yield turns positive on 10-year note for first time since 2012. – Treasury Inflation-Protected Securities, or TIPS, passed the latest threshold in their dramatic yield rise since the beginning of the year when the 10-year note yield turned positive Monday. The yield has been bouncing around 0%, but the “ask” yield registered at 0.068% around 12:15 p.m., according to Tradeweb.
Morningstar: – The CEF bargain bin: Nuveen municipal funds. – We look at some relatively undervalued CEFs and discuss macroeconomic hedging strategies.
3-yr Treasury auction disappointing. Final yield 0.581% above 0.577% prevalent at bidding deadline. Bid-cover lowest since Dec 2010.
— AnthonyValeri (@Anthony_Valeri) June 11, 2013
Cashin: US stocks come off lows in tick for tick response to yield on 10 year backing off from highs. 10 year yield likely theme of the day.
— Barry Ritholtz (@ritholtz) June 11, 2013