California’s Deficit Gone?… An Analysis of Ford Bonds …Muni Tax Exemption Dud….and more!January 10th, 2013 by Simon G
SFGate: – California’s deficit gone? – For the first time in five years, California is not facing a deficit as Gov. Jerry Brown and lawmakers work to put together a spending plan for the next fiscal year. Who’d have believed it?
Charles Margolis: – Ford corporate bonds yield 61% more than US Treasuries. – Ford Motor Co. (F) debt was upgraded to investment grade in May 2012. Since then Ford has issued several new corporate bonds, including $2B in new 30-year bonds that just hit the market.
Cate Long: – The big muniland tax exemption dud. – Alarm bells are ringing across muniland because the discussion about capping the municipal bond tax exemption at 28 percent has surfaced again. So what exactly would Obama’s proposal to cap deductions look like for high earners and their municipal bond tax exemptions?
Mish: His thoughts on the muni market for 2013 - , we are currently at a point where being wrong can be extremely costly. And with each drop in yield, the more likely sitting on the sidelines earning nothing is likely to be right.
Bloomberg: – Liquidity splits bond market most since crisis began. – Investors’ preference for the most- liquid corporate debt is running higher than any time since the credit crisis, a signal they’re preparing for the four-year rally to end.
Independent: – Out of bonds, into equities: if only it were that simple. – There is a concern: that the “switch out of bonds into equities” recommendation is now being made by so many people that, well, maybe it is just a bit too obvious. Sometimes the obvious however turns out right.
Learn Bonds: – Don’t be afraid of rising interest rates. – It seems every day I’m being warned by newspapers, magazines and websites of “financial bogeymen” waiting under my investment bed ready to jump out and turn my dream portfolio into a nightmare. One of these “bogeymen” I hear people are afraid of is rising interest rates. I, for one, am not afraid of rising interest rates and in fact, I’m looking forward to them and here’s why.
The Economist: – Bond markets risk free for a bit longer. – The way the government calculates inflation is of great interest to anyone who’s bought inflation-linked government bonds. So when the government proposes to change the way inflation is calculated, to save its self a few billion in interest payments, you’d be wise to take note. Fortunately investor’s revolt seems to have worked and the proposed changes have been suspended, but that doesn’t mean they won’t try again in the future.
MarketWatch: – Timing is everything for potential “bond bubble”. – A global search for yield led fixed-income investors to pad their portfolios with US investment-grade corporate bonds in 2012. While these bonds have historically experienced low levels of default, they remain exposed to market risk should interest rates spike from their abnormally low levels.
Bloomberg: – Treasury bonds erode 2012 gains before year’s 1st auction. – Thirty-year Treasuries fell, extending a January decline that almost wiped out 2012’s gain, as signs of strengthening economic growth renewed inflation concern before the first auction of the securities this year.
Ploutos: – Equity/Fixed income momentum strategies – January 2013. – The second part of the monthly fixed income momentum strategies series from Ploutos.
Forbes: – Should bond holders be worried? – If stocks accelerate to the upside, what will happen to bonds? While stocks surged to start the New Year the bond market was hit hard as the yield on the 10-year Treasury note rose from 1.756% to over 1.965% in just three days.
ETF Trends: – Short-Duration bond ETFs vs. Money market funds. – More investors are taking a look at short-duration bond ETFs amid talk of reform measures that could take away some of the competitive advantages of money market mutual funds.
The Muni Guy: – Long Beach’s (CA) largest city union agrees to pension reform deal. – The city’s largest employee union has agreed to pension reforms that will save $125.5 million in the next 10 years, officials announced late Wednesday. The concessions combine higher employee retirement contributions with reduced benefits for future employees to save $3.8 million in Long Beach’s general fund and $11.8 million across all funds each year.
Gross: Asset prices appreciate in price these days primarily because the Fed & its banks create credit.When that stops, they don’t go up.
— PIMCO (@PIMCO) January 10, 2013
The #Muni yield curve flattened in 2013, with most of it occurring beyond 10 years.
— Fixedology (@Fixedology) January 10, 2013
Treasuries bounce after good 30-year auction. Yld 0.01% below pre-auction indication. Higher bid-cover, dealer take below avg. 3.07% yld.
— AnthonyValeri (@Anthony_Valeri) January 10, 2013
Often the best time to buy #muniland bonds is when they are first issued (primary market).
— Cate Long (@cate_long) January 10, 2013