PIMCO: – Money for nothin’ writing checks for free. – Bill Gross warns investors should be alert to the long-term inflationary thrust of QE3 check writing. While they are not likely to breathe fire in 2013, the inflationary dragons lurk in the “out” years towards which long-term bond yields are measured. You should avoid them and confine your maturities and bond durations to short/intermediate targets supported by Fed policies.
Barron’s: – Gundlach: Expect 6% junk bond returns in 2013. – Speaking on CNBC, DoubleLine Capital founder Jeff Gundlach reiterates that he doesn’t think there’s a bond bubble, but things might be getting sort of bubble-ish, a bit, in credit markets and he sees junk bonds returning about 6% in 2013.
FT: – Fed split about when to halt QE3. – Officials at the US Federal Reserve are split on whether to keep buying assets until the end of 2013, according to the minutes of their December meeting.
Kiplinger: Is the PIMCO Total Return Fund too big to succeed? - This Kiplinger journalist says yes.
Learn Bonds: – Why are there so few special CD offers, and why you should jump on the few remaining ones! – There has been a sharp decline in the number of people interested in purchasing CDs. Why? The Fed has driven borrowing rates for banks so low, that it doesn’t make sense for them to offer CD rates above 1%. At below 1%, many investors don’t see the point in moving their money to a new bank to earn more interest. However, there are still a few banks which are offering one and two year CD’s with rates above 1%.
Forbes: – Who’s really driving the muni bus? – Who is actually driving the ups and downs in the municipal bond market? When money flows into the muni market, the demand for bonds generally pushes prices in the market higher; when money flows out, demand wanes and bond prices generally decline, pushing the market down. But whose money is behind all this drama?
MarketWatch: – Debt ceiling to be a ‘horror show’ but good for bonds, survey says. – The upcoming debt ceiling debate in Washington is expected to be bullish for Treasury bonds, according to an informal survey done by CRT Capital Group’s bond strategists before every month’s payrolls report.
Artemis: – Total return of the catastrophe bond market beats 10% in 2012. – The total return of the outstanding catastrophe bond market in 2012 beat the long-term average to come in at an impressive 10.3%.
Barron’s: – Average junk bond yield drops below 6% for first time ever. – The average speculative-grade bond yield has now stands at 5.975%, according to the Bank of America Merrill Lynch High Yield Master II Index, undercutting the previous all-time low of 6.001% set Dec. 19. That same average yield began 2012 at 8.24%.
Cate Long: – Is New Jersey fiscally imploding? – New Jersey was in a perilous financial state long before Hurricane Sandy landed on its shores. Governor Chris Christie’s recent tirade against Speaker of the House, John Boehner, shows a man struggling in a financial straight jacket.
ETF Trends: – Junk ETFs highest since 2008 as bond yields under 6% for first time. – Investors’ infatuation will yield and optimism over the US fiscal cliff deal has pushed the largest junk bond ETFs to their highest prices since the global credit crunch.
USA Today: – Bonds battered after cliff deal. – The financial markets are a bit like Greek drama masks: When one market is happy, another is sad. The bond market was sad Wednesday — but it’s not a tragedy, yet.
NASDAQ: – Strong start to 2013 for corporate bonds. – Safe-haven US Treasurys came under heavy selling pressure Wednesday following the budget deal in Congress, but corporate bonds fared better. Their prices declined a bit, sending yields higher, but their “spreads”–the extra yield compared with Treasurys–tumbled, suggesting investors were willing to accept a lower risk premium on corporate debt.
Has any country that started QE ever exited?QE, the Hotel California of Central Bank policies, you can check out, but never leave.
— TF Market Advisors (@TFMkts) January 3, 2013
Cumberland: we like tax-free munis. tax-equivalent-yield makes them even more compelling after “Taxpayer Relief Act” now law of the land.
— Taylor Riggs (@TaylorRiggs_BB) January 3, 2013
— AnthonyValeri (@Anthony_Valeri) January 3, 2013
Bloomberg data showing 10-year #muni yields down about 1 basis point today to 1.82%, after roll yesterday caused a jump.
— Brian Chappatta (@BChappatta) January 3, 2013
— Muni Market Advisors (@Muni_Mkt_Advis) January 3, 2013