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Munis Poised For Recovery…Investors Wary of EM Bonds…Are We Due A Bond Rally?…and more!

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road-to-recoveryBarron’s: – Muni market poised for ‘extended period of outperformance’. – BMO Capital Markets today looks at the state of the municipal bond market more than three months into its slump, and decides it’s high time for a recovery already. From BMO’s Justin Hoogendoorn and Brett Adlard.

MoneyBeat: – Investors remain wary of emerging-market bonds. – Investors mostly stayed away from emerging-market debt in July, despite a modest recovery for the assets during the month.

The Inflation Trader: – Is a bond rally due? – As we head into a very busy week of economic data, the bond market remains drippy with the 10-year yield up to 2.59%. But my message today is actually one of good cheer. The worst of the bond sell-off was now more than three weeks ago, without a further low being established. In my experience, convexity-inspired sell-offs typically end not with a sharp rebound, but with a sideways trade as “trapped” long positions gradually work their way out and buyers start to nibble. But it remains a buyer’s market for several weeks, at least. We are getting far enough along in that process that I suspect we have a rally due.

Learn Bonds: – 10 intermediate-term bonds yielding over 4%. – Financial Lexicon focuses on a list of 10 intermediate-term corporate bonds with yields-to-worst and current yields of at least 4%, maturities of less than 10 years, credit ratings no lower than Ba3/BB-, and prices under 100 cents-on-the-dollar.

WSJ: – Search for muni-bond guidepost sputters. – Regulatory efforts to develop a better guidepost for retail investors in the $3.7 trillion municipal-bond market have been mired by concerns about the integrity of financial benchmarks like the scandal-tarred London interbank offered rate.

Financial Times: – Investors bet on junk bonds to outperform. – The harder the fall, the bigger the bounce back. That has been the story for junk bonds so far this summer, as the sector for the lowest quality corporate credit retains its standing as the only area of US fixed income in positive performance territory for 2013.

Investment News: – In a first, SEC charges muni bond issuer with misleading investors. – The Securities and Exchange Commission today charged an Indiana school district and its bond agency with misleading investors about a bond offering.

Bloomberg: – Tisch bets on munis as yields rebound from ‘ugly contest’. – Loews Corp., the holding company run by New York’s Tisch family, is increasing bets on municipal bonds after the securities declined last quarter.

Bloomberg: – Detroit Bankruptcy judge proposes March 1 plan deadline. –  Detroit’s plan to cut its $18 billion in debt would be due March 1 if the city survives an effort by creditors to throw it out of bankruptcy, according to a schedule proposed by the judge in the case.

Fundweb: Bond funds suffer record redemptions in June. – Fixed income funds suffered £624m ($954 billion) in net redemptions during June, according to the latest figures from the Investment Management Association.

Business Insider: – A bear market in stocks is five times scarier than a bear market in bonds. – In a new paper titled ‘Risk of loss: Should the prospect of rising rates push investors from high quality bonds,’ Vanguard’s Christopher Philips argues investors should be more worried about a potential bear market in stocks than a bear market in bonds.

Bloomberg: – IBM issues $2.15 billion of bonds with two-, 10-year offering. – IBM the largest computer-services provider in the world, has raised $2.15 billion in a two-part bond sale.

FT: – Unilever eurobond sign of switch from banks. – Unilever has issued its first euro denominated bond in five years highlighting how big European companies are increasingly turning to capital markets rather than banks to obtain corporate finance.

Townhall Finance: – Municipal bonds an “outrageous bargain”? – Municipal bonds are an “outrageous bargain” in the wake of Detroit’s bankruptcy filing, according to David R. Kotok, Cumberland Advisors Inc.’s chairman and chief investment officer.

Tom Brakke: – Bond fund returns can go negative year-over-year. – Tom Brakke looks at  the year-over-year changes in the largest funds in particular categories of the fixed income markets for the last three years.

Bloomberg: – Chicago penalty up 25% as rating cut evokes Detroit. – Detroit’s bankruptcy filing is bringing added scrutiny to the finances of Chicago, as the Illinois city’s struggle to contain its murder rate and swelling pension costs leave it with the lowest credit grade in 26 years.

Investment Week: – Which bonds funds can still produce alpha over 12 months? – Global bond funds suffered the worst outflows of all asset classes in June and bond indices fell sharply after comments from the Federal Reserve signalling the end of quantitative easing.

Investing.com: – A technical look at bonds. – By taking a look at the performance of the different bonds year to date. Junk bonds and short treasuries are positive on the year while US long bond, TIPS and investment grade corporate are showing losses for the year.

MoneyBeat: – Investors remain wary of emerging-market bonds. – Investors mostly stayed away from emerging-market debt in July, despite a modest recovery for the assets during the month.

Housingwire: – Not all muni bonds are created equal. – Detroit’s bankruptcy is creating an opportunity for investors to profit from some of the city’s utility and essential services bonds, said NewOak CEO and co-founder Ron D’Vari.

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