PIMCO: – Bill Gross, Investment outlook. – The tipping point. – Should bond investors abandon ship? And who to believe? The captain of the Fed, the co-captains of the USS PIMCO, or just trust your instincts?
CNBC: – Jeffrey Gundlach: Bond selloff has run its course. – Bond investor Jeffrey Gundlach of DoubleLine Capital said the liquidation of bonds has run its course, in an interview with CNBC.
Mark W. Bertolin: – Junk bonds offer opportunity. – In an interesting turn of events, HYG now appears to have broken its past trend and is tracking inversely to 10 year treasury interest rates. HYG is a bond fund with a current yield of 6.51% that invests in lower grade corporate debt. Logically, if rates climb as represented using the 10-year treasury index TNX, then the junk bond category should reflect lower share pricing.
Learn Bonds: – Fed funds rates vs. bond mutual funds. – The sky is falling! Well at least it appears to be in the bond markets. I guess we cannot refer to this as a “Great Rotation” being that stocks have been getting hit pretty hard with the Fed’s recent decision to announce that an end of their stimulus efforts is on the horizon. The simple fact is that as interest rates rise, bond prices will fall. However, history has shown that the gloom and doom prediction that is being predicted for bond holders and bond mutual funds today, has not exactly held true in periods of rapidly rising interest rates of the past.
ETF Trends: – Emerging market bond ETFs: Use caution as rates rise. – Emerging market bond ETFs have been a popular destination for investors looking for extra yield but the funds have posted steep losses as U.S. Treasury rates rise on Federal Reserve tapering talk. Developing market debt ETFs are oversold and could be due for a bounce, but some analysts say the long-term fundamental picture is clouded.
Market Oracle: – How to profit from the Fed-induced stocks and bonds sell-off. – The markets have reeled in reaction to news that the Federal Reserve intends to end its $85 billion-a-month bond-buying program by the middle of next year. Let’s take a look at why this is happening and how you should play it now.
CNBC: – Battered U.S. muni bond market entices investors sitting on cash. – The municipal bond market’s correction in June, one of the steepest drops in a decade, has led to an easy decision for investors this summer: buy munis.
FT: – U.S. rate volatility sparks surge in junk-rated debt yields. – U.S. interest rate volatility has sparked a surge of more than 2 percentage points in yields for junk-rated debt as investors have quickly retreated from the riskiest sector of the corporate bond market.
Forbes: – More lessons from bonds’ (alleged) lost decade. – Bonds can have negative price returns—even US Treasurys. Somehow, folks forget that. Treasurys may be “risk free” in the sense they’re backed by the full faith and credit of Uncle Sam, but in a rising interest rate environment, Treasury prices still fall. And if you choose to avoid liquidating at a loss, you can watch your purchasing power erode as inflation takes a bite from your low-yielding investments.
Forbes: – How will bonds fare as interest rates rise? – When panic struck in 2008 investors sold stocks and rushed into bonds with great exuberance. Over the past five years this extreme cash influx has pushed bond prices higher and yields lower. However, when investors began to sell stocks recently, if the proceeds would have flowed into bonds, then one might have expected bond prices would have risen and yields would have fallen, or at least remained low. In reality, this has not been the case as we have witnessed one of the sharpest and quickest increases in bond yields in decades.
Bloomberg: – Biggest pension gap fails to deter Illinois buyers: Muni credit. – Illinois had to turn away buyers from a $1.3 billion sale of general-obligation bonds even after lawmakers failed twice in the past month to fix the nation’s weakest state pension system.
Reuters: – Cat bond sales surpass 2012 to head towards record high. – Catastrophe bond sales are expected to hit record levels by the end of 2013, brokers and reinsurers say, because the bonds are attractively priced compared with traditional reinsurance.
MoneyBeat: – Bonds, Bill Gross and ocean metaphors. – Gross, the oft-heralded “bond king,” and his $285.2 billion Total Return Bond Fund have been hard hit in the recent credit-market selloff, losing 3.65% in June alone—the 12th-worst showing among 177 similar bond funds tracked by data firm Lipper. Even longtime investors are pulling out.
Advisorshares: – All-time record outflows from bonds. – Outflows of bonds aren’t just catching attention, they are setting new highs not seen since 2008. In contrast, stock buybacks are practically unchanged from the previous quarter. Read the below investor insight by TrimTabs Asset Management to review timely fund flow activity that has taken place in the marketplace.
MoneyBeat: – For Gundlach, Gross, timing bond market proves dicey. – While it’s still too early to officially call the end of the long-term bull market in bonds, many of the bond market’s biggest prognosticators have been forced to do double takes on the rapid move.
Market Realist: – High yield bleeding slows, but is there anything left to drain out? – Over the past month, JNK and HYG, the most popular high yield ETFs, dropped 5%. This drop is unlikely to fully recover given changed expectations of interest rates. Fund flows lower, but what’s left to take out? In short, a lot remains. The high yield market is composed of is $1.4 trillion in bonds, which will not disappear overnight.
Everything in fixed income land has firmed up a lot
— David Schawel (@DavidSchawel) June 27, 2013
NY Fed Dudley becomes latest Fed official to push back on overly aggressive tightening expectations priced into bond market
— AnthonyValeri (@Anthony_Valeri) June 27, 2013
US 7 year debt auction: sells $29bn debt at yield of 1.932 pct, highest yield since July 2011
— Chris Adams (@chrisadamsmkts) June 27, 2013