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What’s Jeff Gundlach Buying?…Bond Investors In Denial…Muni Sell-off Too Excessive…and more!

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Jeff-GundlachMoney Beat: – What Jeff Gundlach is buying during the bond-market selloff. – High-profile bond fund manager Jeffrey Gundlach has scooped up agency mortgage-backed securities in recent days as many other investors rushed for the exits.

CNBC: – Bond investors were ‘in denial’. – Bond investors that banked on unlimited quantitative easing were “in denial”, according to one asset manager, explaining the “violent” market reaction to the Federal Reserve’s warning that its bond purchasing program could soon be scaled back.

Barron’s: – Muni sell-off ‘excessive’, Expect a correction over next 45 days. – In this blog’s third installment its state of the muni market report this week, we check in with municipal strategists at Citi, who say at this point munis are simply bearing the brunt of problems not of their own making.

Learn Bonds: – HYD: Here’s how to calculate your true taxable-equivalent yield. – Financial Lexicon looks at the importance of understanding taxable-equivalent yields, private-activity bond interest, and the Alternative Minimum Tax (AMT). An important read for most municipal bond investors.

Cate Long: – In a bond market massacre, liquid products win. – It comes as no surprise to those who understand markets that the less liquid a product is, the more its price will decline in a fast market rout. This has happened over the last few days in the municipal bond market.

Wall St Sector Selector: – All about the bonds. – If you are looking for what is driving the intraday swings in the stock market these days, you need look no farther than the bond market.

Oblivious Investor: – How do GNMA bonds work? – Mike Piper takes a look at GNMA bonds. What are they and how do they work?

FT: – Convertible bonds cruise back into fashion as rates rise. – Corporations seeking cheap financing are issuing convertible bonds in the US at the fastest pace since the financial crisis, with the recent rise in interest rates adding to the rush.

FT Adviser: – Massive over-allocation’ to bonds. – Investors have allocated too much to fixed-income assets and not enough to equities, ING Investment Management has said.

Bloomberg: – Rotation out of high-grade bonds triggered, Bank of America says. – Ten-year Treasury yields breaching 2.5 percent signaled the beginning of a wave of outflows from high-grade bond funds, according to Bank of America Corp. Hans Mikkelsen.

CNBC: – Junk Bonds suddenly don’t look so good anymore. – Junk bond volume has slowed to $7.1 billion this month, the slowest pace since December 2011 and about one-fifth the average monthly total previously in 2013, according to Dealogic. While correlating to the general trend in fixed income, the slowdown in the junk bond business bodes especially troubling signs for investment banks, which have relied on the debt markets for fully one-third of their business this year, the highest percentage in 10 years.

John M. Mason: – Dire performance by volatile TIPS. – The TIPS market in the United States is dominated by a handful of big institutional investors and large dealers. Trading volumes are far lower than for the Treasury bond market, leading to heightened volatility in times of market stress. But, this market has, over the past two years, been heavily impacted by the movement of funds out of riskier sovereign debt in Europe as a consequence of the lengthy financial unrest occurring on the continent.

FT: – EM junk bonds: the post QE wallop, in one chart. – Look away now emerging market junk bond investors. What you are about to see is not pretty. While the sell-off in emerging market assets over the past few weeks has been pretty indiscriminate, EM high yield corporate bonds – having been one the main beneficiaries of investors’ “dash for trash” – are being hit harder than most.

Investors Chronicle: – Beware bonds: 750,000 pension savers at risk of hefty losses. – Three-quarters of a million workers’ pensions are at risk of devastating losses because the bond funds their nest eggs are invested in by their employers – without their say-so – are losing money.

FT: – Nerves hit bonds and stocks alike. – Some of the correlations dominating markets since the financial crisis have weakened considerably over the past year or so – a function no doubt of the bull run and calmer times.

FT: – Fixed income rout hurts US muni bond debt. – The broad sell off in fixed income assets has hurt few corners of the US debt markets as much as municipal debt.

CNBC: – Pimco flagship fund loses big on bond shock. – Pimco’s flagship Total Return Bond Fund took a hefty hit in June, due to the sharp rise in bond yields that was sparked by fears the U.S. Federal Reserve will scale back its asset-purchasing program.

Ploutos: – The swoon in Build America Bonds. – Build America Bonds will generate positive short-term outperformance if the Fed walks back some of its recent hawkish rhetoric that has pulled forward market expectations on the terminus of quantitative easing. However, long-term, average returns on these bonds, and their related funds, are likely to not be sufficient to justify the high volatility in long interest rates.

ETF Trends: – Investment-grade corporate ETFs caught up in bond sell-off. – Investment-grade bond exchange traded funds have experienced a pullback as investors anticipate Fed “tapering” and rising rising rates, but this may only be the beginning.

https://twitter.com/PIMCO/status/349891266659627008

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