To get the Best of the Bond Market delivered to your email daily click here.
Market Realist: – High yield fund flows stumble, demand side may be getting weak. – High yield bond flows for last week posted the first outflow in five weeks, possibly signaling weak investor confidence.
FT Adviser: – Top 5 tips for investing in emerging market bonds. – Emerging market debt has seen its stock rise in recent years as investors seek new income opportunities away from western government bond yields that barely edge above inflation. With a number of different options available that include active and passive exposure and hard and soft currencies, here our our top tips on how to approach investments in this sector.
Bloomberg: – Investors risk getting burned: Optimism too high for stocks, bond yields too low. – From his view of the world in Scotland, Bruce Stout says investors risk getting burned because optimism is too high for stocks and bond yields are too low. The markets might be proving him right.
Learn Bonds: – Raining dividends, income snowballs. – In this article go over some basic methods of research that may be useful for beginners trying to find companies and funds to start with. I want to emphasize that beginner investors must realize the stock market is currently at an all-time high, and interest rates are at historic lows, so it is important to consider not diving in all at once, remember “slow & steady wins the race.”
Cate Long: – In a Detroit bankruptcy, who is the first in line. – The state-appointed emergency manager for Detroit, Kevyn Orr, has been given a year of legal authority to address Detroit’s insolvency problem. It is a herculean task to right decades of complex problems. Muniland observers believe that the city will end up filing for Chapter 9 bankruptcy. The rationale for this relates to certain limitations of the emergency manager’s authority. Outside of Chapter 9, the emergency manager cannot legally cut debt or pension liabilities, and the likelihood that bond market creditors and the city’s 48 unions will voluntarily make concessions seems slim.
Michael Fabien: – Do income investors have anywhere to hide? – With both bonds and equities starting to reintroduce volatility, where can a conservative income investor “hide out” and wait for better opportunities?
Indexuniverse: – Multi-asset income ETFs come of age. – Multi-asset income ETFs are here to stay, as the Guggenheim Multi-Asset Income ETF’s recent crossing of the $1 billion threshold in assets clearly suggests. Multi-asset income funds have a broad mandate in their quest for yield. While there’s no shortage of income plays these days, most are confined within their respective asset class or sub-asset class buckets. Dividend funds hold equities and maybe some REITs. High-yield funds hold junk bonds. MLP funds focus on royalty-paying infrastructure pass-through partnerships.
Yahoo: – Muni bond investors on edge over tax proposal. – Municipal bonds continue to provide a reliable refuge from stock market volatility and a steady source of tax-free income. But for all of munis’ stability, investors have clearly been scared the past several weeks. While other mutual fund categories have consistently attracted new cash, investors have been pulling money out of muni bond funds.
ETF Trends: – High-Yield ETFs down for third week, diverge from S&P 500. – Junk debt ETFs such as iShares iBoxx High Yield Corporate Bond and SPDR Barclays High Yield Bond are on track for their third straight week of losses. The high-yield corporate bond ETFs are also diverging from the S&P 500, so the credit market doesn’t seem to be confirming the latest bump higher in stocks.
Bloomberg: – Corporate bond sales slow in Europe on Fed stimulus speculation. – ProShares, the purveyor of “alternative” exchange-traded funds, today is launching a high-yield corporate debt ETF that will take short positions in U.S. Treasurys as a hedge. It will be the third—and least expensive—entrant in a growing field of yield-seeking junk bond funds with hedges.
Bloomberg: – Dealers absorbing junk bonds as ETF demand drops. – Wall Street banks are expanding holdings of speculative-grade bonds as prices fall from record highs with investors retreating from exchange-traded funds that buy the debt.
Detroit News: – State panel declares Hamtramck in financial emergency. – A state review team has concluded a financial emergency exists in Hamtramck, the Michigan Department of Treasury said Thursday.
Automated Trader: – Treasury bond yields staring over the edge. – The previous bond update ahead of US payrolls highlighted how bonds appeared to have got ahead of themselves and that the risks were on the downside. In the subsequent price action (especially in the last few days) rallies extinguished quickly in spite of equity weakness. This is due in part to a change in rhetoric from the Fed, suggesting a more serious change in sentiment can occur.
David Fabien: – 2 bond ETFs that have had a May meltdown. – The “sell in May” phenomenon has been largely debunked this year as investors have continued to snatch up risk assets and push the market to all-time highs. Even the Fed raining on everyone’s parade this week did not introduce enough volatility to make a significant dent in year-to-date gains. However, there are two bond funds on my watch list that have seen a significant change in their tenor over the last three weeks.
WSJ: – Treasury bonds rise, shake off strong durable goods data. – After briefly stung by a strong durable goods report, the Treasury bond market got a new lease on life Friday from buying by bargain hunting investors.
Bond vigilantes awaking? @markit says "markets fear experiments are unravelling".
— Cate Long (@cate_long) May 24, 2013