Best of the Bond Market for October 25th, 2012
James Bianco: – 100% of economists surveyed wrong on treasuries – Back in May, when the 10-year was 2.40%, 100% of economists surveyed (64 of 64) thought rates would be higher in six months. As of this writing the 10-year is at 1.75% and November is just two weeks away.
Cate Long: – Building a new municipal bond market. – What the public needs is a muniland equivalent to the New York Stock Exchange’s Consolidated Quotation Plan. Question is who’s going to build it?
Morningstar: A surprising list of 20 funds that have 20% or more invested in Puerto Rico munis - That list, meanwhile, is dominated by a number of single state muni offerings serving investors in states such as Wisconsin and New York. Of the top 20 funds in Morningstar’s database with the most exposure to Puerto Rico, only two have a national mandate.
Citigroup: – US municipal strategy “Special Focus”. – The municipal bond market has rallied strongly in recent months. At the same time, however, threats have increased that Congress might reduce access to this market for state and local issuers.
DNA: – Future market returns should dictate fixed income weightage. – What is the ideal weight you should give for fixed income investments in your portfolio? Financial planners will say less when you are young and more when you are old. For example, a 30-year old professional should hold only 20% or 30% of fixed income in his portfolio while it should be at least 60% for a 50-year old.
Cate Long: – CalPERS loses the plot. – Things are heating up in the Golden State as bankrupt San Bernardino has stopped making payments to CalPERS, California’s public employee pension system. But CalPERS appears to believe that California state law has precedence over federal bankruptcy law, and that the state has rights over San Bernardino that trump the protections that bankruptcy gives it.
Chicago Tribune: – New SEC municipal bond head sees roadmap in report. – The new head of the US Securities and Exchange Commission’s Office of Municipal Securities said Wednesday that he will be using a report released by the agency in July that calls for more oversight of the municipal market.
Bloomberg: – San Bernardino bankruptcy invalid, says employee union. – San Bernardino, the second-largest U.S. city to enter Chapter 9 bankruptcy, should have its court restructuring dismissed because it failed to follow a state law requiring negotiations with creditors before seeking court protection, a government employees union said.
Learn Bonds: – Investment ideas from PIMCO: Buy TIPS, municipal bonds & high quality financials. – Bill Gross considers the steps taken so far to address the fiscal deficit as minimal. So with bonds burned to a crisp and stocks singed the question is where should one invest? PIMCO is neither shy, nor coy about its investment views. In the last couple weeks, PIMCO has published several articles describing exactly what they see as the best investment opportunities.
InvestmentNews: – It looks like a bond, smells like a bond but it’s an ETF. – BlackRock Inc.’s exchange-traded fund arm, iShares, plans to launch a series of corporate bond ETFs that look and act like individual bonds.
Brian Gilmartin: – Q3 bond issuance should drive strong quarter. – Third quarter 2012 bond issuance was — in a word — huge, and MCO will benefit from this when we see the results Friday morning. Per an October 9th report out of PiperJaffray, “Q3 debt issuance posted healthy gains both domestically and internationally, with particular strength in the high yield market.”
Reuters: – U.S. corporate bond new issues. – Here’s a list of upcoming high-grade and high-yield corporate bond offerings in the United States compiled by Reuters and new issue team.
Barrons: – Analysts suddenly hot on bond fund-friendly AllianceBernstein. – Analysts are warming to AllianceBernstein Holding after the asset manager’s third-quarter results. One big reason: A shift toward bond funds that barely missed pushing the firm to its first quarter of positive asset inflows since the financial crisis.
Moody’s says CA school districts face downgrade reviews if ballot initiatives don’t pass – Hope this wasn’t a newsflash to #muniland
— Debtwire Municipals (@Debtwire_Munis) October 25, 2012
Gross: Financial assets are not wealth but claims on real wealth. If claims are brought forward too much and/or growth slows – mkts bubble.
— PIMCO (@PIMCO) October 25, 2012
Citi’s George Friedlander: JCT’s report on the cost of tax exemption is “awful” and their “numbers are absolutely wrong” #nabl2012
— Jen DePaul (@BondBuyerJen) October 25, 2012
— Bond Girl (@munilass) October 25, 2012