Argentinian Naval Ship Repo’d by Bond Trader….Another CA City on the Ropes….Profiting from QE3…and more!October 4th, 2012 by Simon G
Best of the Bond Market for October 4th, 2012
FT: US hedge fund Elliott Capital Management Seizes Argentinian naval ship in Ghana to try and collect on bonds - An Argentine naval vessel crewed by more than 200 sailors has been seized in Ghana as part of an attempt by the US hedge fund Elliott Capital Management to collect on bonds on which Buenos Aires defaulted in 2001.
Bloomberg: Atwater CA declares a fiscal emergency, may run out of cash by year end - The city of 28,000, located among dairies and almond groves about 100 miles (160 kilometers) southeast of San Francisco, declared the emergency yesterday as a $3.3 million deficit may leave it out of cash before year-end, according to budget documents. Officials, who want concessions from public-employee unions, told almost a quarter of municipal employees they’ll lose their jobs as Atwater tries to balance its budget.
Dash of Insight: The Fed just threw smart investors a fat pitch. Here’s how to profit - The timing is a bit different from past QE’s. Since everyone is busy misinterpreting the policy, bashing the Fed, and politicizing the decision, the immediate market impact has been muted.
CNN Money: PIMCO CEO says they blew the Lehman call - We had three scenarios on the wall. Scenario one was everything would be fine. Lehman would be a repeat of what had happened six months earlier when JP Morgan took over Bear Sterns. We gave the highest probability to that scenario.
Financial Lexicon: – Be careful following this investment professional’s advice. – If you spend enough time following the financial markets, you may be accustomed to the fact that the media likes to build up certain investors as all-knowing sages. But just because a person may be known as a leading figure among investors does not mean you should blindly follow that person wherever he or she may go.
Barrons: – Bond price gains likely finished for 2012, head for highest yields. – After the third quarter saw an even further run-up in price for riskier corporate bonds, pushing yields to record lows, bond investors should not expect much more than coupon income for the rest of the year.
Barrons: – Some investors going short in junk bond market. – It might not be time to short the junk bond market, but it might be time to consider going shorter. Shorter-term, that is.
FT: – Use Emerging Market funds as safe haven. – It’s now commonplace to argue that emerging market debt is becoming a mainstream investment for many fund managers. But Bhanu Baweja of UBS says the consensus “massively understates what’s happening”: not only are flows into EM debt growing, as has been widely reported, but they are also changing in nature.
NY Times: – Fed members in accord on bond-buying. – Policy makers at the Federal Reserve were nearly united last month in their belief that the economic recovery needed additional help and that the central bank had the ability to provide it, according to an official account of the meeting released on Thursday.
Bloomberg: – Localities beating States as more pain brings gain. – Debt of U.S. cities and towns is poised to beat state securities for the first time since 2009 as localities’ higher yields and efforts to cut workers lure investors in the $3.7 trillion municipal-bond market.
Investors.com: – Best Fixed-Income ETF Picks For Q4. – The Federal Reserve’s unleashing of a third round of quantitative easing lets risk-averse investors extend their stay in safe-haven Treasuries, but presses those hungry for higher yields to look elsewhere. Several ETF strategists see opportunities in several areas of fixed income. They offer their best ETF investing ideas for the final quarter of 2012.
Learn Bonds: – Inflation Fighting ETFs – PIMCO Style. – There are three basic strategies for choosing bonds (and bond funds) that fight inflation: Find out what they are in this article.
Morningstar: – Webinar – Investing in corporate and high yield bond markets via ETFs. – Investing in corporate debt has become one of flavors of the year, with investors fleeing ultralow yields or rocketing default risk offered by sovereign debt and instead piling into corporate debt with gusto. The theme of our October ETF webinar will be investing in corporate debt, both investment grade and high-yield (formerly known as ‘junk bonds’), via exchange-traded funds.
BusinessWeek: – Subprime gains 30% as Goldman, Cerberus Target Market. – U.S. home-loan securities without government backing, the debt that sparked the worst financial crisis since the Great Depression, shrank last quarter to less than $1 trillion for the first time in eight years, leaving fewer bonds to meet soaring demand as housing recovers.
ETF Trends: – Fixed-Income ETFs for Yield: Junk bonds, emerging markets and more. – The 10-year Treasury note is yielding an anemic 1.6% so it’s no wonder investors are scouring the bond ETF universe in search of income. There are the obvious sectors such as high-yield corporate bonds. However, some fixed-income ETFs reside off the beaten path such as emerging market bond funds that might appeal to investors trying to boost yield in their portfolios.
Reuters: – Forward Calendar – U.S. corporate bond new issues. – The following are lists of upcoming high-grade and high-yield corporate bond offerings in the United States. The information was gathered from Thomson Reuters U.S. new issues team, and other market sources.
“Investment& speculative-grade bond issuance increased in August from an already robust pace in preceding months”But QE is psychological!
— David Schawel (@DavidSchawel) October 4, 2012
Since munis began steady/firmer streak on Sept. 17, 10-yr yield has plummeted 26bps while 30-yr yield has plunged 22bps
— Taylor Riggs (@TaylorRiggs_BB) October 3, 2012
— Brian Chappatta (@BChappatta) October 4, 2012
Page 49 of Harrisburg’s forensic audit refers to “special projects fund” to bribe officials to support new debt. Unclear if established.
— Bond Girl (@munilass) October 4, 2012
Weidmann RT @cnbc: BREAKING: FOMC Minutes – All members but one agree additional QE needed.
— Joseph Weisenthal (@TheStalwart) October 4, 2012