Junk Bond Investors Get Burned…Gross Shifts Family Holdings…The Correlation Between Stocks and Bonds…and more!

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FT: – Junk bond investors burnt in Fed retreat. – Those who followed the “close your eyes and buy” strategy that swept through junk bond markets since the start of the year have just had their fingers burnt.

On Wall Street: – Pimco’s Gross shifts family holdings amid selloff in bond market. – Pacific Investment Management Co.’s William Gross, the billionaire who runs the world’s largest mutual fund, is re-jiggering family investments in Pimco bond funds that have been beaten down by rising interest rates.

Minyanville: – Falling stocks and corporate bonds: 5 Charts that explain the connection. – Hiccups in the corporate bond market are usually preceded by a worsening in the credit derivatives space, particularly credit derivatives tied to large financial institutions, and then followed by a rise in investment-grade and high-yield spreads. Here are the charts that tell the story.

Learn Bonds: – A rare opportunity in this municipal bond ETF. – Last week’s post-FOMC-statement selling brought with it some notable dislocations in the world of ETFs.  One ETF in particular, the Market Vectors High-Yield Municipal Index ETF (HYD), closed the week at a 5.65% discount to net-asset value, its second largest closing discount ever.  The largest ever closing discount occurred on August 8, 2011 at 6.74%.

Money Marketing: – Emerging market fund ‘exodus’ continues as investors drop stocks and bonds. – Investors continued to pull money from emerging market funds last week, according to EPFR Global, although recent declines in other asset classes slowed.

Market Realist: – High yield bonds, the pain continues and will only get worse. – The fund flows for last week once again plummeted as investors remove cash from bonds ahead of the FOMC meeting.

ETF Trends: – Muni bond ETF sell-off reaches sixth day as discounts linger. – Muni bond ETFs continued to tumble Monday with the funds still trading below indicative value in the wake of last week’s rush for the exits.

RT: – Ben Bernanke: Banks, bonds and a big breakdown? – Nobody has actually called last orders, nor has the music stopped at this mammoth party but the markets felt the same terror as children threatened with confiscation of their security blanket. Every month Ben Bernanke buys 85 billion dollars worth of mortgages/bonds/IOUs/old heavy metal albums from banks to grease the wheels of the economy. Instead it just lubricates the banks. Entrepreneurs and small businesses rarely get helped: hence the real economy is moving towards peer to peer lending and crowd funding.

FT: – EM corporate debt: time to keep the ratings in mind. – Whether the global capital flows of the last few years are ended or just temporarily disrupted, here’s a reminder of what investors should be looking out for when it comes to emerging market companies’ debt.

CNBC: – Bond fund outflows hit record level on tapering fears. – Mutual and exchange-traded funds hemorrhaged a record volume of bonds in June, according to a fresh report by TrimTabs Investment Research, as investors fear the impact of a scaling back of the U.S. Federal Reserve’s bond purchasing program.

US News: – Who’s afraid of municipal bonds? – From mid-May to mid-June, the Barclays Aggregate Bond Index of taxable bonds has lost 1 percent, while the Barclays Muni Index has lost 2 percent. That might not sound like much, but we’re talking about municipal bonds here, not stocks. So what happened?

WSJ: – Closed-end funds bite back. – Worries about Federal Reserve policy have hit a favorite destination for mom-and-pop investors: closed-end bond funds. These mutual funds have suffered outsize losses during a rough month for bond funds overall. So what’s the primary culprit for the losses?

FT Adviser: – Passive investing – June 2013. – Ben Willis, investment manager and head of research at Whitechurch Securities, says, “there is still value to be had within corporate bond markets, but warned that investors have to be selective.”

FE Trustnet: – What to do if you’re already invested in bonds. – Hargreaves Lansdown’s Richard Troue says investors should reconsider what exposure they have to fixed income rather than giving up on the asset class altogether.

WSJ Money Beat: – Junk breaks new record as bonds boom in first half. – Investment banks in Europe are on course to end the first half of 2013 having earned more in fees from high-yield issuance than investment-grade bonds for the first time on record.

Bloomberg: – Georgia postpones $157 million debt sale as yields rise. – Georgia led municipal issuers postponing $286 million in debt sales as yields in the $3.7 trillion U.S. local-securities market rose to the highest since October 2011.


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Simon G

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