Bloomberg: – Trading at ’05 low signals buy during sales drought. – Trading in the $3.7 trillion municipal market has fallen to the lowest level since 2005. For investors, that’s a sign to buy as states and cities throttle back new debt sales to the least in two decades.
Barron’s: – Pre-FOMC Playbook: Key dates for bond investors. – When will the Fed start slowing its monthly bond purchases and begin thinking seriously about raising short term interest rates? Key dates for your diary.
Reuters: – PIMCO cuts euro exposure after Cyprus deposit levy plan. – PIMCO, one of the world’s biggest money managers, has reduced allocations to the euro zone in response to a planned levy on bank deposits in Cyprus, and is rethinking forecasts of when the bloc will begin its recovery, a senior executive said.
Learn Bonds: – A strange tale: Muni bonds become shares of the largest airline. – Municipal bondholders that purchased debt to finance airport expansions may become shareholders of the world’s largest airlines. They have been caught in a drama involving two airlines, one bankrupt (American Airlines) and one not (US Airways). The story looks to have a happy ending for bondholders, with the bonds trading above their issue price in many cases.
Morningstar: – Lifting the hood on bond-fund NAVs. – Determining the net asset value (NAV) of holdings that trade infrequently requires use of a special system. So what is it and how is it calculated?
BCA Research: – Investors are not well paid for the level of sovereign risk in the U.K. or France. – This week’s news that the French budget shortfall is larger than expected points to further deterioration in credit quality for that country, and the lack of monetary flexibility works against France’s credit score, as a result we’re underweight French sovereign debt. In contrast, we remain overweight gilts because U.K. policymakers are determined to cut its debt load even at the expense of short-term growth.
Barron’s: – Muni investors see buying opportunity as trade, issuance volumes fall. – Investors are increasingly seeing long-term “buy” signs when they look at today’s muni market, according to a Bloomberg story today that says trading volumes and net new issuance are falling to multi-year lows.
Bankrate: – Hold or fold older US savings bonds? – Dr Don Taylor answers the following question. I have 99 $100 EE savings bonds issued from May 1993 to November 2000. Bonds from 1993 through mid-1995 pay an interest rate of 4 percent, while the later bonds are indicated at below 1 percent. Can the 4 percent rate increase or decrease if I allow those bonds to reach final maturity? I’m not sure what my options are for possibly reinvesting them or even if it is worth it. Would I be better off cashing them out at final maturity?
Reuters: – When sluggish economies are good for stocks and bad for bonds. – the 1980s were a mostly stellar decade for bonds, and the reason was the Federal Reserve’s policy under Paul Volcker, who had a hammer-like plan to snuff out the stagflation of the late 1970s and early 1980s. The lower cost of money was great for bond prices, which increase when interest rates drop. Those years led to a bull run that lasted until 1990, when big stocks dipped 3 percent in total return. After that, stocks began a bull run that lasted from 1991 to 2000, when the dot-com bubble burst.
IndexUniverse: – PowerShares plans short term junk ETF. – Invesco PowerShares filed regulatory paperwork to bring to market a short-term global bond exchange-traded fund focused on high-yield credits, its second filing this month detailing a short-dated bond fund after it put one into registration two weeks ago focused on investment-grade debt.
SacBee: – Board seeks $8.6B in Calif. high-speed rail bonds. – The California High-Speed Rail Authority voted Monday to issue nearly $8.6 billion in taxpayer-approved bonds to build the nation’s first bullet train as the state rushes to begin construction in July. Officials are now on track to sell $3.7 billion of the bonds. That includes $2.6 billion for high speed rail and another $1.1 billion for improving existing commuter rail systems in Northern and Southern California.
Jon Lott: – J.C. Penney bonds may be a value now. – It seems as if everyone is stomping on J.C. Penney (JCP) and Ron Johnson which suggests to me it might be time to look at the bonds and determine if there might be value.
Barron’s: – Muni ETFs, CEFs Trading at discounts to NAV, auguring more outflows. – Citi says the most liquid municipal exchange-traded funds and closed-end funds have started trading at discounts to their respective net asset values. Even though that signals value, Citi says in the past it’s been a precursor to longer-lasting municipal bond fund outflows.
Albuquerque Business First: – Legislature passes bill to allow community banks to buy municipal bonds. – New Mexico’s community banks would be able to negotiate the purchase of general obligation bonds sold by cities and counties, thanks to a bill passed by the state Legislature.
CivSource: – Municipal bond tax exemption gets Federal support, some states may still see underperformance. – The National League of Cities (NLC), and the National Association of Counties (NACo) all issued a unified statement in opposition to ending the tax exemption for municipal bonds. The measure has been under consideration at the federal level since last year as government scrambles for revenue.