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This Week’s Top Bond Market Stories – September 28th Edition

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Learn Bonds

Learn Bonds: – How long will the Fed hold off tapering? – Our outlook is: The Fed will keep monetary policy extraordinarily accommodative for at least another year. The level of extraordinary policy accommodation will be adjusted, up or down, based on economic data.

Learn Bonds: – Why the recent drop in interest rates may not be what you think. – Last Wednesday some interesting things occurred that had an immediate influence on interest rates and might serve as a model of how we can interpret the movements in interest rates and, hopefully, increase our understanding of what is happening in the world.

Learn Bonds: – The role stocks play in an income investor’s portfolio. – Part 2 of Financial Lexicon’s introduction to income investing. This article focuses on diversifying your portfolio by purchasing securities across a variety of asset classes and asset class categories.

Learn Bonds: – Income Investing – What exactly is it? – Financial Lexicon’s introduction to income investing. The first in a series of articles about the basics of income investing, to be published over the next couple of weeks.

 

Municipal Bonds

InvestorPlace: – Hunting for yield? Target these 3 municipal bond funds. – Investors’ hunt for yield is a hunt that rarely loses momentum. It has led to lofty values in such asset classes as dividend-paying stocks, as well as various bonds and bond funds.

Bloomberg: – Chicago bears biggest pension load of debt-laden locales. – Chicago and surrounding Cook County have the largest pension burdens among the 50 most-indebted U.S. local governments, according to Moody’s Investors Service.

Cate Long: – Public pension assets reach highest-ever level. – The pension doomsayers, who claim that pensions are direly underfunded and losing ground, may be surprised to hear that public pension assets grew to their highest-ever level for the last fiscal year.

Zacks: – 5 Highest yielding Zacks #1 Ranked municipal bond mutual funds. – Here we will share with you the 5 highest yielding Zacks #1 ranked municipal bond mutual funds. Each has earned a Zacks #1 Rank (Strong Buy) as we expect these mutual funds to outperform their peers in the future.

Corvus Research: – Closed-end funds: Finding cheap income in a popped muni bond bubble. – Given the current interest rate environment and uncertainty surrounding tapering of QE, caution is reasonable. Analysts at Goldman Sachs predict 10-year treasuries will hit 4% by 2016, keeping CEF portfolio value trends flat or negative until rates stabilize. For anyone who wants to trade bonds, the message is clear: stay away.

 

Treasury Bonds

CNBC: – Why October will be good for bonds. – Stocks weren’t the only surprise in September. The real shocker was the surprise performance in bonds. The 10-year is having its best month since April.

Zacks: – Time to buy Treasury bond ETFs? – We have highlighted three Treasury bond ETFs that could continue to offer price appreciation to investors as long as the Fed does not taper. The trio have a decent Zacks Rank of 3 or ‘Hold’ rating as well, suggesting that these could be a good picks at present.

WSJ: – Treasury bonds break three-day winning streak. – U.S. Treasury bonds took a break after a three-day price rally as the market braces itself for new debt sales. The Treasury Department is scheduled to sell $35 billion in five-year notes at 1 p.m. EDT Wednesday, the second leg of this week’s $97 billion new note auctions. A sale of $29 billion in seven-year notes on Thursday will wrap up the week’s debt offerings.

WebProNews: – Bonds continue to rise, making investment wise. – Buying Treasury bonds today is as sure of a bet as putting some money on Barry Bonds was back in 2001.

Bloomberg: – Demand strong as ever as institutions bid for bond sales. – Demand for new Treasuries from their biggest owners is proving impervious to rising yields and the retreat of Wall Street dealers.

 

Corporate Bonds

Donald Van Deventer: – Nokia corporation bonds: What kind of finnish ahead? – This note focuses on the risk and return on the bonds of Nokia Corporation, which once dominated the cell-phone world that Apple Inc. now rules.

Bloomberg: – Verizon, Sprint lead record month for U.S. bonds. – Sales of corporate bonds in the U.S. reached an all-time high this month, with phone companies Verizon Communications Inc. (VZ) and Sprint Corp. (S) leading offerings of about $193.7 billion.

FT: – Companies rush to sell long-term debt. – A rush of companies selling U.S. benchmark bonds to take advantage of lower interest rates on Wednesday was set to crown September as a record month for investment grade debt issuance.

ValueWalk: – Two methods/rules for analyzing corporate debt. – There are two distinctly different ways to analyze corporate bonds. The first way is the old standard, which relies on fundamental analysis of a company’s financial statements. The second way relies on contingent claims theory (options theory, Merton’s model) and relies primarily on market-oriented variables, such as stock prices and option volatility.

Barrons: – Fed’s taper surprise may bode well for corporate bonds. – After the Fed stunned the markets last week, the outlook for corporate bonds may have brightened.

 

High-Yield

ETF Trends: – Outperforming high-yield ETF sweeps in cash. – An actively managed fixed income ETF strategy that we have covered in this column on several occasions since the fund’s inception back in 2010 has experienced a strong September in terms of new asset growth.

Market Realist: – Why high yield bond issuance has maintained its strong momentum. – The high yield market was very busy last week. A total of 20 transactions priced a total of $10 billion, slightly down from the $13 billion that rushed the market the week before the Fed’s announcement of delaying tapering.

Kiplinger: – Loomis Sayles looks for bargains in the junk pile. – Anticipating that interest rates will resume their climb, Loomis Sayles managers are favoring high-yield bonds over Treasuries.

Reuters: – Ten U.S. high yield issuers storm the market. –  Ten high-yield issuers announced new deals on Monday in a rush to grab an unexpected longer window to print bonds before the Federal Reserve finally starts to reduce its bond buying program.

FT: – Investor flows surge to high-yield and stocks. –  Investors poured money into high-yield bonds and equities this week, pushing inflow volumes to multi-month highs, as the Federal Reserve’s decision to maintain its asset-buying programme sparked a global rally in so-called risk assets.

 

Emerging Markets

MoneyBeat: – Emerging-Market bond funds snap run of outflows. – Cash has started to flow back into emerging-market bond funds for the first time in over four months. That reflects resurging interest in the asset class after the U.S. Federal Reserve’s decision to provide continued stimulus to the economy.

The Conversation: – Not all emerging markets are in the same QE boat. – The US Federal Reserve’s surprise decision to continue quantitative easing (QE) was generally well received in those countries with rapidly growing and industrialising economies. They were worried that the Fed might have ended an era where cheap dollars have moved by the trillion to the so-called “emerging markets”.

Income Investing: – If bond market sell-off is over, munis & emerging markets attractive. – Anthony Valeri of LPL Financial sees municipal bonds and emerging market debt as winners following the Fed’s decision not to curtail asset purchases that boost the economy.

Bloomberg: – Bill Gross’s I-told-you-so moment added boost in Mexico. – Bill Gross’s prediction that the Federal Reserve would unwind its unprecedented stimulus slowly at a time when bond traders were bracing for a quicker reduction is paying some of the biggest dividends south of the border.

 

Bond Funds

Business Insider: – Investors dump equities and pile back into bonds. – Over the past week, following the Federal Reserve’s surprise decision to refrain from tapering quantitative easing last Wednesday, bond funds snapped their 8-week streak of outflows as investors piled $4.5 billion into the asset class, the largest weekly inflow in five months.

Bloomberg: – Fuss at 80 trounces bond rivals by thinking like a stock picker. – Loomis Sayles & Co.’s Dan Fuss left rival bond-fund managers including Bill Gross behind in his eighth decade, by using a style generally associated with bargain-hunting stockpickers.

Morgan Myrmo: – Searching for yield with Bill Gross. – Investing like Bill Gross, Morgan Myrmo looks at PIMCO’s investment for clues on how to build a portfolio that mirrors Gross’s performance.

FT: – Bond barons emerge winners in Fed move. – To a man, Wall Street’s best strategists were caught out by the Federal Reserve’s decision not to curb its emergency asset-buying. Now investors want to know who has lost money, who has made it and, indeed, where it can be made in coming weeks.

Telegraph: – Bond funds that will weather the storm. – When central banks stop printing money the bond market is expected to fall. Which bond funds are safest?

 

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