Bill Gross’s Monthly Commentary is Out…Foreign Muni Buyers Matter…Fuss on Overbought Bonds…and more!January 31st, 2013 by Simon G
PIMCO: Bill Gross’s monthly commentary “Credit Supernova” is out – an entertaining read as always.
Bloomberg: – Bill Gross: Credit-based markets running out of energy. – Bill Gross, manager of the world’s biggest bond fund, said investors are increasingly at risk as global financial markets run out of energy and time.
CNN Money: – Bill Gross: Be very afraid of the markets. – Bond guru and PIMCO managing director Bill Gross isn’t buying into the bull market. In fact, he’s warning investors to be afraid, be very afraid, of how inflation and the flood of cheap money will affect all investments.
Learn Bonds: – Rolling down the yield curve: How to make money by waiting. – One of the easiest ways to making money investing in bonds is called rolling down the yield curve. The strategy involves buying longer dated bonds and selling them after 2 to 3 years to profit from their rise in value during that time. The key to this strategy is the shape of the yield curve. As long as shorter term bonds yield less than longer term bonds, this strategy can boost returns over buying a shorter term bond and holding to maturity.
Governing: – Muni Bonds’ future may lie in foreign investors’ hands. – Why do foreign investors matter to the municipal bond market and what happens if they withdraw from the market altogether and invest at home?
Daily Traded Alert: – Warning: Consider selling these “High-Yield” investments now. – The big gains in high yield are over. Right now, the high risk is not worth the low “yield.” Let me explain…
Ploutos: – The high yield bond trade for the long run. – When we examine loss rates by ratings category over a matched time horizon we see that BB-rated bonds have outperformed CCC-rated bonds and investors have experienced much lower credit losses. Increasing returns while lowering risk seems like a good investment strategy to me.
WSJ: – Emerging bond market points to risk exit. – Central banks are flooding markets with liquidity amid growing accusations of currency wars, leaving investors scurrying in search of something, anything to give them a direction on where to put their money.
Minyanville: – 12 questions regarding the bond market bubble. – As 2013 began, financial market participants were showered with a new batch of predictions and outlooks for the New Year. A common prognostication (again) was the forecast of an end to low interest rates and the bursting of a bond market bubble that many continue to say is imminent.
QFinance: – Local sovereign bonds in emerging markets: A safe haven? – Asian bond markets still have some way to go to achieve the levels of the US and European bond markets, but according to a recent paper by three Bank of International Settlements economists, they are already being regarded by investors as something of a “safe haven” in difficult times. But is that faith misplaced?
WSJ: – The dangers of making munis the bedrock of your portfolio. – Investors have long considered municipal bonds a “can’t lose” investment, and they have been a source of psychological comfort. But given the current low level of coupons and the real risk of rising interest rates in the future (and the resulting decline in bond values), these bonds should no longer be seen as the bedrock of any portfolio—more as a strategic investment.
Bloomberg: – Bonds most ‘overbought’ in 55 years, Loomis Sayles’s Fuss says. – “This is the most overbought market I have ever seen in my life in the business,” Fuss, 79, who oversees $66 billion in fixed-income assets as vice chairman of Boston-based Loomis Sayles & Co., said in an interview in London. “What I tell my clients is, ‘It’s not the end of the world, but for heaven’s sakes don’t go out and borrow money to buy bonds right now.’”
WSJ: – Knight looks to sell fixed-income units. – Knight Capital Group Inc. plans to sell some assets and has cut staff ahead of the trading firm’s planned sale to a rival, according to people close to the company.
ValueWalk: – Goldman Sachs prepares for bond market explosion. – Goldman Sachs Group, Inc recently decreased, quite substantially, the amount of money it can lose if interest rates increase, resulting in the fall of bond prices. The Bank further hiked its borrowing in order to gain low interest rates. This move comes in the wake of growing concerns of the bank over the bond market.
FT Adviser: – Fixed income tops 2012 inflows in spite of late equity rally. – Equity funds outsold fixed income funds in each of the past four months of 2012 as assets under management in IMA funds hit a record £658bn. However, fixed income funds still dominated retail inflows in 2012 after topping the sales charts for the first eight months of the year before the risk rally took hold.
Professional Pensions: – Is now really the best time to be piling into corporate bonds? – Record low interest rates are putting a lot of pressure on investors. Central Banks are gradually forcing down the available yields on any reasonably safe asset, and many funds are increasingly desperate in their hunt for returns. Corporate bonds and especially riskier, higher yielding corporate bonds have been flavor of the month, but is now the right time to be investing in corporate bonds.
Bloomberg: – San Francisco redevelopment successor plans first bonds. – The successor to the San Francisco Redevelopment Agency plans to sell as much as $160 million in bonds in the first issue of new debt to back a project by one of the blight-fighting organizations in California since lawmakers eliminated them a year ago.
FMS Bonds: – More concern over tobacco bonds. – If you don’t consider yourself a speculative investor, but still hold tobacco bonds originally purchased as investment-grade securities, Moody’s recent announcement may give you cause for concern.
Bloomberg: – California debt rating raised by S&P after surplus forecast. – California had the credit rating on its general-obligation bonds raised today by Standard & Poor’s for the first time since 2006 as tax increases championed by Governor Jerry Brown bolster the state’s fiscal outlook.
Artemis: – While 2012 catastrophe bond issuance was high it still didn’t satisfy investor demand. – The latest report on the 2012 catastrophe bond and insurance-linked securities market reveals that whilst 2012 was a great year for primary issuance of catastrophe bonds, the volume coming to market was insufficient to satisfy strong demand from investors.
Gross: Great rotation? January flows at PIMCO show few signs of bond/stock rotation. Cash/money markets may be the source.
— PIMCO (@PIMCO) January 31, 2013
the muni bond market today lacks both supply and ratio…..investors need to understand the very “roach motel” like quandry the Fed faces
— Michael Pietronico (@MillerTabak) January 31, 2013
Fun to watch some of the recent movements in Gross’ actively managed $BOND etf… big move into 5yr USTs & higher coupon MBS
— David Schawel (@DavidSchawel) January 31, 2013
Corp bonds have that wyle E coyote feeling. The moment he realizes he has run off the edge but hasn’t started falling. Beep beep
— TF Market Advisors (@TFMkts) January 31, 2013