This Week’s Top Bond Market Stories – December 27th Edition


Learn Bonds: – Investing in 2015 – 5 important financial themes to follow. – The next twelve months should prove rather critical from both a market valuation and monetary policy viewpoint. Here are 5 major themes for both stock and bond investors to monitor that will have an impact on portfolios in the year ahead.

Learn Bonds: – Economic and interest rate forecast for 2015. – In spite of the recent dovish comments by the Fed, our base case scenario is for the Fed to begin tightening at the September 2015 FOMC meeting. However, there is a chance that the Fed tightens in June and a chance it tightens in 2016. Bond Squad’s opinion is that structural economic sluggishness in Europe and Japan persists.

To see a list of high yielding CDs go here.


Municipal Bonds

WSJ: – SEC tightens policing of municipal debt market. – (Subscription) U.S. securities regulators, ratcheting up their policing of the $3.7 trillion market for state and local debt, are seeking to ban local officials from the market for their involvement in alleged fraud.

Bloomberg: – California debt hangover lingers amid fiscal gains. – California, which has won the biggest gains in creditworthiness of any U.S. state since the recession ended in 2009, may find further improvement stymied by a $350 billion bill for municipal bonds and retiree costs.

Financial Planning Consultants: – Municipal bond investing for beginners. – The Definitive Resource for Pennsylvania Municipal Bonds. – The best page on the web for everything related to Pennsylvania municipal Bonds. Track CUSIPs, learn about issuers and dive deep into the world of Pennsylvania.


Bond Market

Economic Musings: – Stocks & bonds fall – My 2015 outlook. – Regardless of why your thesis has or hasn’t worked out, we’re sitting at the end of 2014 with 30y yields under 3% and the S&P nearing 2,100. The market seemingly believes there’s no ceiling for stocks, and it’s becoming more & more accepting of low long term treasury yields. The question is what will happen going forward – so here’s some of my thoughts.

Citywire: – U.S. bond sell-off fears ‘really overblown’, says JPM’s Sheikh. – Long-term developed markets bonds look attractive as the back end of the US Treasuries curve may flatten further causing yields to drop lower.

FT: – Will FOMC changes offer bonds more succour? – US government bonds are ending the year on the back foot. Treasury yields have been rising for a week since Federal Reserve chairwoman Janet Yellen suggested that the US central bank could raise its key overnight lending rate as soon as April.


Treasury Bonds

Zacks: – Can the rally in Treasury bond ETFs continue? – The strength in the Treasury bond markets has surprised many analysts. At the end of last year, many were expecting that interest rates will go up in 2014 as the economic growth picks up and Fed moves towards raising interest rates.

Forbes: – The amazing ten-year Treasury. – At the beginning of 2014, the Ten-Year Treasury was yielding slightly over 3.0%. In the past few weeks, it breached the 2.10% mark. This translated to a total return exceeding 20.0% through the end of November. However, since interest rates cannot continue to fall indefinitely, this performance cannot be sustained. When interest rates finally rise, if the rise is fast and steep, this segment of the financial markets will experience great difficulty. What does the immediate future hold for bond yields?

WSJ: – Bad day for bonds may be just noise. – As the Dow Jones Industrial Average was soaring to new heights Tuesday, U.S. Treasurys had their worst day in more than a year.


High-Yield Bonds

George Fisher: – Energy bonds causing havoc and stress for all high-yield bond fund holders. – Energy high-yield bonds carry almost twice the risk premium as does industrial bonds and almost three times the risk premium associated with healthcare bonds.

Market Oracle: – Stock market crash and high yield debt. – Since late 2008, the unprecedented quantitative easing (QE) that flooded our economy has produced another terrible consequence — the unbelievable mispricing of high-risk, high-yield bonds.

WSJ: – Oil, Fed spur global bond split. – High-yield bonds in the U.S. and Europe are parting ways after years of moving virtually in lockstep.


Emerging Markets

Reuters: – Pimco still sees longer-term value in Russian bonds – paper. – The world’s biggest bond investor Pacific Investment Management Co (Pimco) sees the economic crisis in Russia having only a limited impact on the financial system in the longer run, investment chief Dan Ivascyn told a German newspaper.

Bloomberg: – Cuba’s hot defaulted bond market carries buyer-beware label. If anyone in the U.S. knows the market for defaulted Cuban debt, it’s Leo Guzman. The walls of his Coral Gables, Florida-based brokerage firm are covered with the remnants of a market that once flourished in the U.S.. So when Guzman, 68, says that investors’ sudden interest in snapping up the debt for pennies on the dollar is premature, it’s worth listening to.

Bloomberg: – Russia on verge of junk as S&P puts rating on negative watch. – Russia may lose its investment-grade credit rating for the first time in a decade after Standard & Poor’s said it’s considering a cut amid the country’s worst economic crisis since the 1998 debt default.


Green Bonds

Financial Advisor: – Green bonds sell big in 2014 as finance bids to help climate. – A “green” bond market has taken root this year, with municipalities and corporations issuing new environmentally-focused bonds and money managers jumping in to buy them.

Institutional Investor: – Setting standards for transparency in green bonds. – As green bonds grow more popular, there is greater demand for a clear definition of environmentally friendly investments.


Catastrophe Bonds

Artemis: – Strong secondary cat bond trading in November due to impending maturities. – The month of November saw strong trading activity in the secondary market for insurance-linked securities (ILS) and catastrophe bonds as investors looked to capitalise on yields from short-dated cat bond notes which are soon to mature.


Investment Strategy

Financial Post: – 6 issues that will affect your fund investments in 2015. – The year has been full of surprises for investors, not the least of which is that oil prices have cratered of late, causing the Russian ruble to disintegrate, and that country’s central bank to resort to desperate and, to this point, unsuccessful measures to rescue the currency.

Barron’s: – 4 Reasons to broaden your fixed income playbook. – Do bonds still make sense? For generations of investors, bonds have played an important role in portfolios, protecting capital, providing income and serving as a diversifier and counterweight to equity market volatility.

Toma Hentea: – Momentum and rebalancing of retirement income portfolios. – Robust investment portfolios can be constructed with just two ETFs: one representing the total stock market and another representing the total bond market.


Bond Funds

Reuters: – U.S. based bond funds post $9.4 bln outflows in latest week. – Investors in U.S.-based mutual funds pulled $9.4 billion out of bond funds in the week ended Dec. 17 on profit-taking following gains in bonds this year, data from the Investment Company Institute showed on Tuesday.

Kiplinger: – 5 Great ETFs for 2015. – Beating the market isn’t nearly as important as not getting creamed. That means sticking mainly to blue chips both here and abroad, taking special care in emerging markets and limiting interest-rate sensitivity in bonds. With that in mind, below are my five favorite ETFs—in no particular order.


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.

Simon G

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