Learn Bonds: – Investors look to bond volatility as yields tighten. – Bond yields have been compressed for years by the actions of the Federal Reserve, and things aren’t set to get better. As the European Central Bank sets up for its own interference in the price of bonds, debt investors are looking for ways to cash in on bond investment even as yields become worthless.
Learn Bonds: – Understanding the implications of lower oil prices. – For the average American, oil under $50 a barrel represents a tax cut. For those with lengthy commutes or typically rack up high miles on the open road, it has become considerably less painful to fill up at the gas station. This represents more disposable income that can be distributed in other places, saved in the bank, or invested in the securities markets. But its not all good news.
Learn Bonds: – ECB executive board proposes quantitative easing. – Well, the word is out. The European Central Bank is moving to a program of quantitative easing, one similar to the efforts of quantitative easing put on by the Federal Reserve System in the United States. The parameters seem to be that the ECB will purchase €50 billion, or around $58 billion, in government bonds per month for at least a year.
Learn Bonds: – Understanding bond risk – Part 2. – Most conservative investors focus on the yield of a bond, and get excited when the yield is high compared to other investments. That brings us to the discussion of interest rate risk.
To see a list of high yielding CDs go here.
ETF News: – Muni ETFs may be more attractive than Treasuries. – Municipal bond exchange traded funds have been on a tear, and the munis market still looks relatively cheap compared to U.S. Treasuries.
Intelligent Investing: – 5 Reasons to own muni bonds in 2015. – After a robust performance by municipal bonds in 2014 (see chart below), what should investors watch for in the year ahead? The MacKay Municipal Managers (MMM) team has published its five key insights for 2015. The overall conclusion is that the team sees attractive opportunities in certain segments of the market and believes that positive returns are best achieved through active management.
The Street: – Municipal bonds were great but a 2015 repeat run isn’t likely. – Closed-end municipal bond funds had a great 2014, climbing 19%. However, according to Chris Larsen, director of closed-end funds at Legg Mason, that performance is unlikely to be duplicated in 2015.
Reuters: – Bankrupt San Bernardino to impair bondholders, not Calpers, in exit plan -city attorney. – Bankrupt San Bernardino will significantly impair its bondholder creditors while paying pension fund Calpers in full in a plan to be presented in May, City Attorney Gary Saenz said on Thursday.
Reuters: – Bond funds worldwide attract $6.9 bln inflows in latest week. – Investors worldwide poured $6.9 billion into bond funds in the week ended Jan. 14, marking their biggest inflows in nine weeks, data from a Bank of America Merrill Lynch Global Research report showed on Friday.
Bloomberg: – What Draghi’s bond buying in Europe means for U.S. debt markets. – The European Central Bank’s resolve to funnel more than a trillion dollars into the region’s capital markets may be a boon for borrowers across the Atlantic.
LPL Financial: – Taking a page from the Fed. – The ECB is widely expected to announce a Fed-style outright government bond purchase program this week. A large and bold plan may arrest the rise in global government bond prices, but anything else may reinforce the record low-yield environment.
FT: – BlackRock and MarketAxess target europe. – BlackRock, the world’s largest asset manager, has brought its corporate bond trading venture with MarketAxess to Europe to try to offset the retreat of large investment banks from the market.
WSJ: – Foreigners buy U.S. assets in Nov, led by agencies, corporates. – (Subscription) Foreigners bought long-term U.S. securities in November, with investors buying agency and corporate bonds, as well as equities.
WSJ: – U.S. Government bonds rise as crude-oil prices fall 4%. – (Subscription) Treasury bonds strengthened on Tuesday, with the yield on the 30-year bond falling to a record low, as a selloff in crude-oil prices stoked demand for haven assets.
WSJ: – U.S. government bonds lifted by ECB bond buying program. – (Subscription) U.S. Treasury bonds pared earlier price losses on Thursday after the European Central Bank announced the launch of an ambitious monetary stimulus program to buy government bonds aimed at curbing the threat of deflation.
Bloomberg: – Flight to volatility is what you get in flight-to-safety trades. – Investors are piling into U.S. government bonds looking for safety. What they’re getting are securities whose values are fluctuating more than those on junk bonds.
Investment Grade Bonds
WSJ: – Corporate-bond investors anticipate giant deals. – Investors and bankers are bracing for another wave of giant corporate-debt sales this year, as companies rush to tap abundant demand while rates stay low.
Fidelity: – High yield bond market discussion and 2015 outlook. – Join us to hear from Fidelity’s High Income Division as they discuss some of the key issues that impacted the high yield market in 2014 and provide an outlook for 2015. Attendees will also hear about products offered by Fidelity to help meet investors’ needs. A question and answer session will follow.
WSJ: – Where to exit the market herd. – (Subscription) Going with the crowd might have helped in high school, but it’s not necessarily a good investing tactic. With that in mind here are three contrarian investment plays.
Mathew Sawyer: – Which junk bond ETF is best for 2015? – JNK and HYG have near identical returns over the past 5 years. Both have seen their payouts decline along with interest rates. But which is best?
Bloomberg: – Travelers discloses $224 million of energy-related Junk bonds. – Travelers Cos., the lone property-casualty insurer in the Dow Jones Industrial Average, had about $224 million of energy-related bonds that were rated below investment grade as of Dec. 31.
S&P Capital IQ: – High yield bond funds see $241M investor cash outflow. – Retail cash flow for U.S. high-yield funds has flipped back into negative territory, with a net $241 million outflow during the week ended Jan. 21, with roughly one-third linked to the exchange-traded fund segment, at $82 million, according to Lipper.
BusinessDay: – Nigeria bonds to remain on JPMorgan index despite negative watch. – Nigerian bonds will most likely remain on the JPMorgan Emerging Markets bond index despite the recent negative watch placed on them by JPMorgan.
Bloomberg: – Ukrainian bonds sink to record as Poroshenko sees more violence. – Ukrainian bonds sank to their lowest level on record after President Petro Poroshenko warned the pro-Russian insurgency in a conflict that has claimed almost 5,000 lives may escalate as the country struggles to secure another bailout.
Bloomberg: – ECB to have bullish impact on emerging markets, SocGen says. – Emerging-market assets will stage a “pretty robust rally,” says Societe Generale SA. It’s “hard not to be bullish,” according to Aberdeen Asset Management Plc.
Environmental Finance: — Winds of change blow through cat risk markets. — Growing investor demand for catastrophe exposure is helping the insurance sector change how it manages natural disaster risk, Barney Schauble of Nephila Advisors tells Environmental Finance.
Artemis: – Cat bonds continue shift towards ‘cedent-friendly structures’. – A factor that helped to drive record catastrophe bond issuance in 2014 was the structural changes which influenced a more sponsor friendly environment, according to the world’s largest reinsurance firm, Munich Re.
FT: – A little market medicine to prevent the next pandemic. – (Subscription) ‘Pandemic bonds’ could inject private-sector rigour into global medical bureaucracies.
Harris Roen: – Which are the green alternative energy mutual funds? – There is a wide range of how focused the different green mutual funds are on alternative energy. Mutual Funds with the greatest alternative energy focus are ALTEX, NALFX and GAAEX.
The World Bank: – Green bonds are changing investor expectations & making sustainable investing easier. – Green bonds are mobilizing billions of dollars a year for development projects that countries and cities need, carried out in ways that are good for the climate and environment.
Bloomberg: – Bond investors face trillion-dollar choice between safety and yield. – Investors across the globe are facing a trillion-dollar dilemma: either pay up for the safety of lending to nations like Germany and Switzerland, or buy riskier debt at a time of faltering economic growth.
Money: – How to boost returns when interest rates totally stink. – With bond rates looking bare, income investors are eager to grab greener options. Higher payouts are out there, but watch your step: Some are riskier than others.
MarketWatch: – These bond ETFs protect your money from inflation’s bite. – Some investment analysts are recommending U.S. Treasury Inflation-Protected Securities (TIPS). If you agree, the best way to go about it is with index-based ETFs.
Investment News: – Bond ETFs defied pundits in the fourth quarter. – Markets had an unexpected reaction to the end of quantitative easing: Bonds rose in value.
Businessweek: – BlackRock leads funds raising credit lines amid review. – As Larry Fink predicts bouts of volatility in bond markets in the coming years, his firm is leading a push among mutual fund firms to reinforce their defenses.
WSJ: – Bill Gross invested more than $700 million in new Janus fund. – (Subscription) Janus Capital Group Inc.’s chief executive confirmed on an earnings call Thursday that new star manager Bill Gross has invested “more than $700 million” of his own money in his new mutual fund.
Citywire: – Absolute return: four most-improved bond managers revealed. – Ultra-low bond yields have forced investors to become very inventive when allocating capital to the fixed income universe, with the popularity of absolute return strategies rising as a result.