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Reuters: – Pimco Total Return fund suffers $7.5 bln outflow in July. – Bill Gross’s Pimco Total Return Fund, the world’s largest mutual fund, suffered an outflow of $7.5 billion in July after investors pulled a record sum from the fund in June, data from Morningstar showed on Friday.
MuniNetGuide: – Puerto Rico to test post-Detroit muni market. – the Commonwealth of Puerto Rico will be returning to the market for the first time this year with what is generally perceived as its strongest credit, the Puerto Rico Electric Power Authority (PREPA). Next week’s $600 million PREPA deal will also be the first major issue since the Padilla Administration took over and should be a good test of investor tolerance for marginal credits in the wake of the Detroit fiasco.
Financial News: – Bond slump saddles big banks. – The recent market turmoil exposed a new weakness in the balance sheets of large banks: they hold so many bonds that they can’t avoid trouble when interest rates rise.
Learn Bonds: – Bond fund ladders: Using them to prepare for higher interest rates. – If you have spent much time studying the bond market you have likely heard of bond ladders. If not the concept is pretty simple. You buy individual bonds with maturity dates that are spaced out over a number of years. When the bonds with the shortest maturities mature, you roll them over into the longest maturity you have chosen for your ladder. Here’s how to create a well diversified bond ladder using mutual bond funds.
Point Bonita: – How to use fixed maturity bond ETFs to build a bond ladder. – As an alternative to the above article, here’s a great video which explains in easy language how to use fixed maturity bond ETFs to build a bond ladder.
Barron’s: – After rout, time to be bullish on mortgage REITs, MBS? – The second quarter will go down as one of the most tumultuous in mortgage real estate investment trust history. But it’s not time to buy yet, Nomura Securities said Friday.
Cate Long: – How much federal money already goes to Detroit? – The likelihood of a federal bailout for Detroit is small to none, but there is a discussion about the funds that the federal government sends to Detroit on an annual basis. This has been a form of life support for the city. The question is how much Detroit already receives from the federal government.
MarketWatch: – Should you bet on stocks, gold or bonds? – A new month means we have potential changes in the group of advisers in my top performer categories. So now’s a good time to update the message of their consensus forecasts of the stock, gold and bond markets—both in their own right and in contrast to the worst performers.
Lending Memo: – Why P2P lending is amazing: The fertile fields of consumer credit. – Why do sites like LendingMemo seem to go on and on about peer to peer lending? What about it is worth all this adoration?
ETF Trends: – How Detroit’s bankruptcy affects bond ETFs. – For the broader municipal bond market, we do not anticipate a widespread systemic effect and investors should expect little market impact as Motown’s problems have long been known to bond traders. But what does this event mean for holders of muni bond ETFs?
Reuters: – U.S. bankruptcy court to shed light on Detroit case timeline. – A court hearing on Friday may provide a roadmap for how Detroit’s historic bankruptcy filing will unfold as the judge overseeing the case could set a speedy schedule, appoint a mediator and rule on other matters.
Reuters: – U.S. municipal bond funds report $2.24 bln weekly outflows. – U.S. municipal bond funds reported $2.24 billion of net outflows in the week ended July 31, nearly twice the previous week’s $1.23 billion, according to data released by Lipper on Thursday.
Barron’s: – Another $5.3 billion in ETF inflows for week. – In a strong week for equity inflows, at $6.6 billion, most of the total — $5.3 billion — was via ETFs, according Bank of America Merrill Lynch’s latest investment strategy report on global fund flows.
Reuters: – No summer slowdown in U.S. leveraged loan market. – It used to be that the U.S. leveraged loan market would see a big slowdown in the summer months, especially as July turned into August. But this year issuers are continuing to tap the market to take advantage of declining yields and the high levels of demand the asset class is enjoying at the moment.
Barron’s: – After taxes, Aaa muni yields close in on Baa corporates. – In the wake of the concerns stemming from Detroit’s bankruptcy filing, yields on municipal bonds have soared–even those with impeccable credit quality. In fact, according to Anthony Valeri, Fixed Income Strategist for LPL Financial, the taxable-equivalent yield on 10-year, triple-A-rated municipals has nearly matched that of Baa corporate bonds.
7yr Treasury leading bond market up after leading it down yesterday. Sign of illiquid market where hedging flows dominate.
— AnthonyValeri (@Anthony_Valeri) August 2, 2013