This Week’s Top Bond Market Stories – August 9th Edition

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LearnBonds: – Favorable trends make Home Depot a buy. –  After a rousing five-year growth trajectory, the question for Home Depot (NYSE: HD), the world’s largest home improvement retailer, is: can it continue? I say it can and recommend that you consider buying the stock.

LearnBonds: – One thing you need to know about the Fed and inflation. – You may have noticed that the prices of things you buy seem to be getting a whole lot more expensive lately. From food to gasoline to a whole host of other things people tend to rely on, the relentless push higher in the prices of things people need seems to know no end. It’s borderline insulting that the Fed’s monetary policy is one that intentionally devalues each and every person’s economic reward (money) for the labor they provide to their employers and/or customers.

LearnBonds: – Making sense of the latest fixed income market news. – This is a slow week for economic data. In this edition of “Making Sense,” we will discuss  today’s one economic report and catch readers up on the latest news from the fixed income markets.

LearnBonds: – A contrarian view of high yield bonds. – July was not the month to be buying high-yield debt. With major indexes HYG and JNK dropping by about 4% each, bond investors were in a rush for the exits on higher than average volume, especially during the past week. The move comes on the heels of a mild yield spike in Treasuries. Should you look at this weakness as a buy opportunity?

LearnBonds: – Retirement planning for millennials – Asset classes. –  A closer look at the different asset classes that make up a typical investment portfolio. Investment professionals build portfolios using a number of different asset classes to guard against uncertainties in the financial markets.

Municipal Bonds

MoneyNews: – Municipal bond sales fall steeply in July from prior year. – Issuance of U.S. municipal bonds fell steeply in July, with sales for the first seven months of 2014 running 15.4 percent below the same period last year, according to Thomson Reuters data released on Friday.

Investors.com: – Whither ‘muniland’? Municipal debt ebbs as banks loan. – This is not your grandfather’s municipal bond market. Old beliefs about bondholder protections have been challenged by high-profile cases such as those in Detroit and California. The federal government, once seen as a partner by state and local governments, is now a roadblock or worse.

Marketplace: – “Mini” muni bonds — double your money, help your city. – Municipal bonds are the sort-of boring financial tool that big institutional investors use to hedge their bets. But this week, the city of Denver is hoping to attract a totally different class of buyers for its bond sale.

Lumina News: – Using municipal bonds as an investment vehicle. – The nation’s economic woes have affected all of us, but municipalities have been hit particularly hard, resulting in cash-strapped state and local governments across the country. Consequently, you might be wondering how this situation could affect an investment class you might be considering: municipal bonds.



Market Realist: – The must-know basics of fixed income investing. – Let’s review the basics. A lot of investors evaluate fixed income sectors by looking at the level of yield they might receive for a given level of risk. We continue to explore how investors consider interest rate risk and portfolio positioning in the current environment.


Bond Market

Forbes: – The Week Ahead: Will bond fund holders be singing the blues? – The stock market finally got hit last with its first heavy round of selling since early February. The Dow Industrials gave up its gains for the year. It had been lagging the other market averages like the S&P 500 and Nasdaq Composite all year.

Trustnet: – Don’t be fooled – the bear market in bonds is coming. – JPM’s Bill Eigen explains that there are a number of myths surrounding the current bond market, when the reality is that fixed income investors are going to be hit by capital losses if they don’t diversify.

LPL Financial: – Bonds take a breather. – After a strong start to 2014, bonds took a breather in July with the broad Barclays Aggregate Bond Index posting a modest loss. The decline follows a meager 0.05% return in June.

Institutional Investor: – What happens when bond investors want their money back? – With Wall Street shying away from fixed-income trading, bond managers are positioning their portfolios for an inevitable liquidity crisis.

Reuters: – U.S. municipal bond funds post another week of inflows -Lipper. – Demand for U.S. municipal bonds has remained strong throughout the summer, a key investment season, with municipal bond funds posting $16.6 million in net inflows for the week ended Aug. 6, according to Lipper data.


Treasury Bonds

Investing.com: – 10-year Treasury speculators decrease bets for third consecutive week. – Large Speculators net bearish positions fell to a total of just -5,806 contracts.

Businessweek: – Treasuries fall as Middle East truce reduces demand for safety. – Treasuries fell, pushing the yield on 10-year notes higher for the first time in three days, as a truce took effect in Gaza and Israel pulled out its remaining troops, reducing demand for the safety of U.S. government debt.

MarketWatch: – 10-year Treasury yield falls in line with bunds. – U.S. Treasury bonds jumped on Wednesday, with the 10-year yield dropping to its lowest yield since May, as geopolitical uncertainty had investors seeking the perceived safety of government debt.

CNBC: – U.S. bonds hold gains as safe-haven bids counter sunny claims data. – U.S. Treasury bonds recommenced their upward swing on Thursday, as the confirmation of Russia’s retaliatory sanctions kept market risk-aversion at a high in spite of a surprise drop in jobless claims.

WSJ: – U.S. Treasury bond yield hits lowest since June 2013. – Benchmark government bond yields in the world’s most advanced nations on Friday fell to fresh lows of 2014 as geopolitical worries boosted the allure of haven bonds.


Investment Grade Bonds

FT: – Doomsayers distrust ‘sexy part of the market’. – According to the Barclays Aggregate index, fixed income investors are now getting yields of less than 3 per cent on a typical US investment-grade corporate bond, and barely 100 basis points of yield over and above risk-free Treasury rates. That is great for borrowers, but bond investors may come to rue not having built in any cushion for increased credit risk.

Businessweek: – Berkshire leads most daily bond sales in U.S. since June. – Sales of corporate bonds in the U.S. exceeded $10 billion today for the first time since June 30 as investment-grade companies take advantage of a decline in borrowing costs to refinance debt and fund stock buybacks.


Junk Bonds

Bloomberg: – Falling junk-bond ETFs show concern after bank retreat. – It’s been an ugly week for U.S. high-yield bonds, the worst in more than a year. As investors fled, they turned to the easiest exits and pulled more than $1 billion from exchange-traded funds, according to data compiled by Bloomberg. With Wall Street banks generally devoting less capital to trading, there wasn’t much of a buffer on the other side to prop up values.

IFR: – U.S. high-yield market waits for stability. – Activity in the US high-yield primary market was subdued Monday as banks wait for a few days of stability before pulling the trigger on new deals.

Income Investing: – BofA: High yield looks just fine, once fund outflows end. – With everyone wondering if the summer high-yield bond selloff is over yet, and whether or not it’s created a buying opportunity, Bank of America Merrill Lynch‘s high-yield strategy team weighs in today, tracing the current woes mainly to retail investor sentiment.

Kiplinger: – The managers of a top bond fund turn bearish. – Loomis Sayles Bond has cut back dramatically on junk and emerging-markets bonds and has built up its position in safe Treasury issues.

Forbes: – U.S. high yield bond funds see shocking, record $7.1B cash outflow. – Retail-cash outflows from high-yield funds ballooned to a shocking, record $7.07 billion in the week ended Aug. 6, with ETFs representing just 18% of the sum, or roughly $1.28 billion, according to Lipper. The huge redemption blows out past the prior record outflow of $4.63 billion in June 2013.


Emerging Markets

Telegraph: – Are problems emerging for 2014’s star performers? – The emerging markets may have performed better than expected, but can they compete when the US economy is firing on all cylinders, asks Tom Stevenson.

Businessweek: – Argentina nerves drag distressed bonds to weakest in a year. – Investors in emerging-market distressed bonds are facing the weakest quarter in a year amid Argentina’s default and political crises in Russia and Ukraine.

Market Realist: – Emerging market bonds: The pros and cons of investing. – Learn more about emerging market spreads and whether now is the right time to invest in EM bonds.


Investment Strategy

Investorplace: – 8 ETFs to take advantage of a Fed stimulus pullback. – Interest rates could find renewed life, and if so, you’ll want to be in the right position to profit.

Scott Arterburn: – Small steps are better than doing nothing. – I think there is a way for people to get more comfortable and ease themselves back into investing. I would suggest that they start out by investing in U.S. government and corporate bond ETFs.

ETF Channel: – 10 oversold ETFs. – These 10 ETFs have entered oversold territory. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.

Bloomberg: – The disastrous bet against bonds bears just can’t refuse. – You’d think investors would sour on a bet against bonds that’s lost 25 percent in seven months. Turns out some people have a very high tolerance for pain.

Citywire: – Cut developed corporates and up EM sovereigns, says bond star. – Improvements in emerging market sovereigns has led bond star Cedric Morisseau to reallocate cash out of corporate bonds and into the developing markets.


Bond Funds

Reuters: – Gundlach’s DoubleLine Funds see 6th straight month of inflows. – Jeffrey Gundlach’s DoubleLine Funds had net inflows of $603 million in July, with its flagship DoubleLine Total Return Bond Fund attracting net inflows of $375 million.

Newsmax: – PIMCO Total Return had withdrawals of $830 million in July. – Bill Gross’s Pimco Total Return Fund had $830 million of net investor withdrawals in July, the smallest month since redemptions began in May 2013, when clients began pulling money from the world’s biggest bond fund as performance faltered, according to Morningstar Inc.

Barron’s: – ETFs extend their reach, with unknown consequences. – Buying a government-bond fund is like paying to hear Yo-Yo Ma on the radio. So asserted Peter Lynch back in the 1980s, when he was riding high as manager of the Fidelity Magellan Fund. Things have changed a lot in the meantime.

ETF Trends: – ETF chart of the day: Core bonds. – We have spent a considerable amount of time discussing fixed income ETFs and how some segments have gotten bruised in the recent downdraft, and one actively managed product in the space stands out impressively lately, that being BOND (PIMCO Total Return, Expense Ratio 0.55%).

MarketWatch: – Your money is at risk when mutual funds aren’t diversified. – We buy mutual funds because the people running them are supposed to be smarter than us. At least they should be sufficiently astute and disciplined to avoid the mistakes that ordinary investors are prone to make, like taking excessive risk to obtain higher returns and failing to diversify adequately.


All trading carries risk. Views expressed are those of the writers only. Past performance is no guarantee of future results. The opinions expressed in this Site do not constitute investment advice and independent financial advice should be sought where appropriate. This website is free for you to use but we may receive commission from the companies we feature on this site.
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