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Treasury Scrutinizes Bond Deals…March is bad Month for Munis…Fed Throws Lifeline to Weak Companies… and more!

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WSJ: – Treasury scrutinizes a shortage of notes. – The US Treasury Department is probing whether traders in the $11 trillion Treasury market hoarded securities to drive up the price of 10-year notes, one of the world’s most-used benchmarks.

Barron’s: – The cruelest month for munis. – Bond shoppers having a hard time finding bargains ought to keep an eye on the muni market this month. March has been the worst-performing month for municipal bonds for years, producing positive returns only five times since 1990.

CNBC: – Fed throws junk bond lifeline to weak companies. – Struggling companies that otherwise might not be able to stay afloat have found a friend in the Federal Reserve. The central bank’s cheap-money policies have allowed borderline companies to get low-cost financing thanks to investors who are thirsting for yield and buying risky bonds as the Fed keeps its target funds rate near zero. While that’s been a boon for poorly rated firms, it also poses the threat that companies that otherwise might fail are getting artificial support and in danger of causing substantial economic damage once interest rates rise.

Learn Bonds: – Confiscating bank deposits – The latest European bailout. – Bank deposits, especially those that are accompanied by deposit insurance, are generally regarded by everyday people as being risk-free.  If you put your money in a savings or checking account at a bank, you do so under the assumption that you will be able to access and spend that money, in whole, when the money is needed.  What happened in Europe over the weekend challenges that assumption.

Bloomberg: – PIMCO’s Kiesel says corporate bondholders ‘wake up’ to risks. – Investors are “finally” acknowledging the risks of holding corporate bonds with yields hovering at about record lows as the Federal Reserve holds benchmark interest rates at close to zero for a fifth year, according to Pacific Investment Management Co.

WSJ: – Treasuries rally as Cyprus sparks Euro zone fears. – Investors sought the safety net of US Treasury securities Monday as developments in Cyprus renewed anxiety over the euro zone’s sovereign-debt crisis.

Morgan Stanley: – Municipal bonds monthly. – After successfully navigating the year-end fiscal cliff and acquiring a tailwind of higher income tax rates, the municipal market faces the reversal of favorable technicals. After three months of heavy bond redemptions that coincided with tepid supply, March, April and May typically bring less investable cash and heavier supply. These
factors may present an opportunity for more compelling yields…a process that may already be underway.

Reuters: – Puerto Rico’s budget woes worsening, Moody’s says. – Moody’s Investors Service said on Monday that Puerto Rico’s budget gap has doubled since December, when the Wall Street credit agency cut its credit rating for the Caribbean island to near-junk bond status.

Reuters:  – Treasury seeks 10-yr notes data after market disrupted. – The US Treasury Department on Friday called on institutions holding a large amount of benchmark Treasury notes to provide information on their positions following a week in which there was unusual activity in market.

WSJ: – Treasury-Bond bulls win out for week. – An unexpected slide in U.S. consumer sentiment Friday deflated optimism over the economic outlook, pushing investors into the safety net of Treasury bonds. The price rally sent the benchmark 10-year note’s yield below 2% again and wrapped up a strong week for the U.S. government debt market. The weekly strength provides a balm to bond bulls who were crushed by bears a week ago.

WSJ: – When investments get pricey, It’s time to play defense. – Stocks are at record highs. The multi-decade bull market for bonds is likely over. But these days, even playing defense requires treading carefully. What’s a cautious, long-term investor to do?

Bloomberg: – Providence gets 30% bonus curbing $109,000 retirees. – Providence was so close to running out of cash a year ago that it couldn’t pay for tires on police cars. This month, Wall Street lined up to lend to Rhode Island’s capital, shrinking its yield penalty 30 percent.

WSJ: – Easy-money era a long game for Fed. – The gazillion-dollar question in financial markets these days is this: When will the Federal Reserve turn to the exit ramp?

Barron’s: – Cyprus bailout bank tax boosts Treasuries. – After limping along for weeks, Treasuries are once again the world’s favorite investment on Monday, this time thanks to a new form of euro-zone worries coming from Cyprus.

Boston Globe: – Treasurer’s office unveils new website for municipal bond investors. – The state has introduced a new website to give more information to municipal bond investors, with a goal of driving down Massachusetts’s borrowing costs by providing greater transparency.

CNBC: – US bond prices ease on stronger retail sales. – US Treasury debt prices slipped on Wednesday on news of stronger-than-expected retail sales in February, but nearly all the day’s losses were erased after the Treasury’s sale of 10-year notes drew strong demand.

Reuters: – Canada budget to show revenues C$2.1 bln lower than forecast. – The Canadian government’s budget on Thursday will grapple with how to compensate for a C$2.1 billion ($2.06 billion) drop in revenues, a government official said on Monday.

Reuters: – Foreigners pile into Canadian corporate debt in January. – Foreigners resumed their net purchases of Canadian securities in January, making their largest acquisitions of private corporate debt instruments since October 2001, Statistics Canada reported on Monday.

ETF Trends: – FlexShares TIPS ETF sees assets, trading surge. – TIPS Bond products saw a jolt in activity last week. The TIPS space in general in the ETF space has proven to be a rousing success, judging by the net level of assets in the space, for TIP (iShares Barclays TIPS, Expense Ratio 0.20%) is the largest product here, with a healthy $20.6 billion in AUM.

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