Bill Gross’s Monthly Outlook…David Schawel’s 2013 Predictions…Big Banks Being Stupid…and more!December 4th, 2012 by Simon G
PIMCO: – Bill Gross Outlook – Strawberry Fields – Forever? – Bill Gross speaks the world listens. Likes commodities, inflation protected bonds and high quality municipal bonds; dislikes high yield bonds, long dated developed country bonds, banks and insurance companies.
Economic Musings: – David Schawel looks at the fixed income markets going forward into 2013 – Thinks the run in high yield is over, likes leveraged loans instead, not likely to see a dramatic rise in US Treasuries, likes agency derivatives, hates mortgage REITs.
CNN Money: – Why aren’t big banks issuing more long-term debt? – Many banks are thinking more about maximizing short-term profits than about building a stable base of funding that will protect them when interest rates inevitably rise again.
FA: Morningstar launches municipal bond ratings - Morningstar Inc. has added analyst reports on 1 million bonds issued by states, municipalities and other public entities to its research database.
CNBC: 4 reasons Bank of America analysts like the 2 year Treasury – Including the end of unlimited FDIC insurance on 1.6 trillion at the end of this year and the end of operation twist.
Bloomberg: – Allstate shuns bond market food fight to seek hard assets. – Allstate Corp. Chief Executive Officer Thomas Wilson is cutting longer-term bonds from the insurer’s $77.7 billion fixed-income portfolio as he seeks to invest in hotels and toll roads with yields near record lows.
Bond Vigilantes: – Corporate bond market liquidity – flush or flushed? – It has been a great few months for corporate bond issuance, as illustrated in the chart below. This huge flush of new transactions where buyer (investor) meets seller (issuer), shows that the primary market is in a historically healthy state, with buckets of liquidity. However, since the credit crunch there has been a great deal of discussion re the corporate bond market becoming less liquid, as dealers’ ability to bid for bonds has gone down the pan. Which is right?
NY Times: As Companies Seek Tax Deals, Governments Pay High Price - A Times investigation has examined and tallied thousands of local incentives granted nationwide and has found that states, counties and cities are giving up more than $80 billion each year to companies.
Barron’s: Vanguard High yield Fund may reopen soon - Money has started flowing out of the $18 billion Vanguard High-Yield Corporate Fund (VWEHX) of late, setting the fund up for a reopening, writes Daniel P. Wiener, editor of the Independent Adviser for Vanguard Investors.
ETF Trends: – Muni bond ETF opportunities and risks as fiscal cliff looms. – Municipal bond ETFs have been standout performers in the fixed-income market this year and are gathering steam heading into 2013 on expectations tax rates will rise and make the asset class even more attractive. Register for the ETF Trends Muni Bond ETF Opportunities and Risks webcast to get the latest information.
FundWeb: – Alliance trust’s Davidson sees bubble in high yield market. – Alliance Trust Asset Management’s head of fixed income Rod Davidson says a bubble is building in the high yield part of the fixed income market.
Learn Bonds: – Are bond funds riskier than bonds? Yes, and here’s why. – Owning a bond fund versus individual bonds in most cases will not provide a major difference in your expected return over longer-holding periods. However, if interest rates rise, the value of most bond ETFs and mutual funds will go down. While the reverse is true, I much more worried about interest rates rising than dropping.
The Market Oracle: – A new strategy for high income investing with ultra-low risk. – This strategy involves trading what are essentially pre-refunded bonds. That means the money to buy the bonds back is already set aside, and the buyback date is already set. This strategy is not wholly without risk however so you’d be well advised to look at the potential pitfalls before jumping in.
NASDAQ: – Fear higher taxes? Then buy these tax-free high yielders. – Municipal bonds have always been great tax shelters. But with the fiscal cliff creating uncertainty over taxes, there have been big capital inflows into the group in the past few months. In spite of those gains, municipal bonds are still one of the few assets that offer tax-exempt income. And with the fiscal cliff approaching, investors looking to reduce their tax liability can only benefit from the tax-free yields of the muni bonds.
Reuters: – California draws on reserves for tobacco debt payments. – California officials have tapped reserves for payments on two series of state tobacco bonds due to insufficient tobacco settlement revenue, according to notices filed with Municipal Securities Rulemaking Board on Monday.
Reuters: – US corporate bond new issues. – A list of upcoming high-grade and high-yield corporate bond offerings in the United States.
Gross: The key to the Kingdom is the 5-year TIP yield. Model it vs. stocks/risk assets since Lehman.
— PIMCO (@PIMCO) December 4, 2012
— Murray (@MuniOnLooker) December 4, 2012
— Fixedology (@Fixedology) December 4, 2012