Economists Say Fed to Bump QE to $45 Billion/Month…Is the Muni Run Done…Ford Bonds..and more!December 11th, 2012 by Simon G
Bloomberg: –Fed seen pumping up assets to $4 trillion in new buying. – The Federal Reserve will amplify record accommodation tomorrow by announcing $45 billion in monthly Treasury buying that will push its balance sheet almost to $4 trillion, according to a Bloomberg survey of economists.
Index Universe: – Muni ETFs run-up not over. – Muni ETFs are hitting all-time highs as the relationship between Treasury yields and muni yields continues to evolve. Ultimately, the dynamic between municipal bonds and Treasury’s is evolving, and although muni ETFs are hitting all-time highs, history says they have room to run.
ETF Trends: – Can muni bond ETFs extend streak in 2013? one expert says no – The $3.7 trillion municipal bond market has been on a solid two year run with a 20% gain, according Merrill Lynch data. Analysts at Morgan Stanley now predict that investors need to brace themselves for the first year of losses within this sector, including focused muni-bond exchange traded funds.
Bond Squawk: – Ford Motor bonds return from the brink. – Since the financial crisis of 2008, Ford has made substantial progress on its turnaround as evident by its credit ratings. In early 2012, Ford Motor bonds were upgraded by Moody’s to Baa3 and back to Investment Grade. Ford has one bond issue that offers great value and potential.
Learn Bonds: – Help your children buy a house without getting into trouble with the taxman. – What’s the difference between a mortgage and personal loan? A mortgage is a loan for the purpose of purchasing real-estate, collateralized by the real-estate being purchased. A personal loan can be to buy a house or provide a down payment; however, it is not collateralized by the house. If you are borrowing money from or lending money to family, you really want it to be a mortgage and not a personal loan.
Alliance Bernstein: High-Yield Bank Loans vs. High Yield Bonds - there are a few holes in the case for piling into high-yield loans.
Daily Finance: Market Vectors High Yield Municipal Bond ETF crosses $1 Billion mark - HYD is the first high-yield municipal bond ETF, and just the fourth municipal bond ETF overall, to pass this threshold. This milestone puts the entire Market Vectors suite of six municipal income ETFs over $2 billion in AUM.
Bloomberg: – Bond hoarders squelch trading in record issuance. – Corporate-bond trading is failing to keep up with unprecedented issuance, accounting for the lowest proportion of outstanding debt since at least 2005.
Morningstar: – Dividend payers hold appeal, but be mindful of risks. – It’s easy to see the appeal of dividend-paying stocks versus bonds. For one thing, bond yields are downright depressed because of a stampede into fixed-income assets during the past few years. Investors are also rightfully concerned about what a sustained period of rising interest rates could mean for bond prices, as a new supply of higher-yielding bonds will tend to depress the prices of older, lower-yielding bonds.
All Financial Matters: – Which is better: a 50/50 stocks-bonds or a 100% stocks? – Here’s an interesting study looking at the monthly total returns for the S&P 500 Index and Corporate Bonds over 30-year periods from 1926 – 2011. So which scenario turned out better?
CFO: – Bond market opens up to convertibles. – Relatively few companies have raised debt via convertible bonds this year, but deal pace has picked up in the past few months, especially in the early fall. Sales of the hybrid instruments have a chance to surpass last year’s total of $20.7 billion.
Reuters: – Pension bonds risky for state and local governments. – Municipal bonds that states and local governments use to pay for some of their public pension obligations rarely improve the issuer’s credit quality, Moody’s Investors Service said on Tuesday.
About: – November 2012 and year-to-date bond market returns. – November brought a continuation of some familiar trends for the bond market, with mildly positive returns for the market as a whole and strong outperformance for the higher-risk segments, including corporate, high yield, and emerging market bonds. Even though investors have plenty of negative headlines to worry about, President Obama’s re-election ensures that the U.S. Federal Reserve will be able to maintain its current policy of monetary stimulus and ultra-low interest rates – a positive for the higher-yielding segments of the market.
Street Authority: – Invest like the rich – and get yields up to 7%. – Emerging markets have experienced staggering growth in the past 10 years. And even though growth rates have recently slowed due to weakness in the global economy, they are still expanding at a much faster pace than developed countries like the United States, the United Kingdom and Japan.
WSJ: – Corporate debt sales hit record. – The bulk of 2012 bond sales has been for refinancing higher-yielding debts. But since the presidential election, several companies have taken on debt to reward shareholders.
Financial News: – Hedgies fear bond bubble. – Hedge fund managers think that the next bubble is in the credit markets, according to a new report, mirroring recent warnings from asset managers that liquidity in the European corporate bond market is drying up.
Detroit Free Press: – Detroit Mayor Bing talks with Obama about city’s finances. – The office of Detroit Mayor Dave Bing says he met one-on-one with President Barack Obama to discuss topics including the city’s financial crisis.
Barron’s: – Sell Venezuelan bonds on new of Chavez cancer recurrence? – Venezuela’s bonds have been trading up for weeks on hopes for a change from President Chavez to someone more, um, “business friendly.” The Barclays Emerging Markets Venezuela Bond Index has gained 13% since Nov. 15, driving yields down to 8.9%m from 11%. That has some portfolio managers thinking it may be time to head for the exit.
Bloomberg: – Who got California into this mess? – Nine years ago, California Democrat Gray Davis became the first U.S. governor in 82 years to be recalled by voters. The state’s 20 million taxpayers still bear the cost of his four years and 10 months on the job.
The Economist: – Blessed are the governments. – When Treasury bond yields fall to historically low levels, other markets are bound to follow. According to Stuart Culverhouse at Exotix, a broker, the yield on emerging market government dollar debt has dropped to 4.4% which is a low for the decade and very probably an all-time low.
Gross: Wlth tax pckn up steam Financl reprssion (- real rates), highr taxs on incm n captal.Cn’t beat it but can ease pain.More tomrrw.
— PIMCO (@PIMCO) December 10, 2012
Gross: Escape the wealth tax tip #1: Buy intermediate Treasuries and roll down a near perpetually steep yield curve.
— PIMCO (@PIMCO) December 11, 2012
Get ready for more bull stimulus… “@zerohedge: The economy is recovering so strong, Bernanke is about to print another trillion.
— Cate Long (@cate_long) December 11, 2012