FOMC Minutes Bombshell…List of Corporate Bonds to Avoid…What Does FINRA Know That We Don’t…and more!February 20th, 2013 by Simon G
Bloomberg: – Several on FOMC said Fed should be ready to vary QE pace. – Several Federal Reserve policy makers said the central bank should be ready to vary the pace of their $85 billion in monthly bond purchases amid a debate over the risks and benefits of further quantitative easing.
MarketWatch: – Morningstar release list of corporate bonds to avoid. – Morningstar has published its quarterly list of “Bonds to Avoid,” including analyst commentary about corporate credits. Morningstar’s Bonds to Avoid list represents the debt of companies that its analysts believe are unattractive, based on Morningstar’s corporate credit rating and other factors including event risk.
Market Advisors: – What does FINRA know that we don’t? – Last Thursday FINRA took the time to send an “alert” out on what a rate hike could do to your bond portfolio. While we agree that investors need to focus on duration (and we always do), FINRA may be pointing in the wrong direction, and being somewhat “alarmist”.
Learn Bonds: – Is Lending Club going through growing pains? – After signing up for an account with Lending Club in early January my funds are only 10% invested, this is despite being told my account would be fully invested with 3-4 weeks. So what’s going on? We delve a little deeper to find out.
YCharts: – Bill Gross is ETF king now as well. – The most successful ETF launch in 2012 was Pimco Total Return (BOND). Bill Gross’ actively managed fund launched in late February and now has $4.1 billion in assets.
Bloomberg: – Obama seeks US bond program to increase public works spending. – President Barack Obama called for a bond program to boost state and local government spending on public works projects as part of an infrastructure development plan.
Citywire: – Keen eye on cash spurs top corporate bond manager’s performance. – One of the strongest performing global corporate bond managers of the past three years has pledged to cut his current high levels of cash in order to tap 2013’s top credit opportunities.
Investment Europe: – After 30 years of bull market, more selective path required for fixed income. – Ross Pamphilon, co-chief investment officer and portfolio manager at ECM, says that the current investment climate demands a more selective approach by investors in fixed income.
TribeLive: – Great times for bonds could be about to change. – Wall Street has been anticipating the Great Rotation for some time. So far this has not happened, but why not? Retail investors still do not trust the market. Earnings have been lower and there are still many issues in the world’s economies. Retail sales are down for February. There are probably three extra issues affecting this. Gasoline prices have gone up 25 cents in the last two weeks. This takes a lot of discretionary spending power away from consumers.
Index Universe: – Go broad and own shorter bonds. – In today’s risk-on/risk-off market environment, ETF investors are pressed to find just the right balance in their portfolios, and broad asset allocation could prove to be the answer. Broad diversification is key, but so is exposure to fixed income in this current volatile environment. The icing on the cake would be liquid access to frontier markets, but that, he says, has yet to be made available.
Fox Business: – Morgan Stanley raising $4.5 billion in US bond market. – Morgan Stanley (MS) is borrowing $4.5 billion in a multipart bond deal Wednesday, marking its largest U.S. debt offering since April 2011. The market had been anticipating a major deal from the investment bank since it posted fourth-quarter earnings in mid-January.
FT Advisor: – Alternatives to cash for safe income generation. – We find ourselves in perverse times. Base rates remain rooted at record low levels, with no sign of a change in the near future. This creates significant problems for those who wish to earn an income on their capital. So where should those who want to generate income turn?
Bloomberg: – Harrisburg dodging crisis seen brewing investor loss. – Harrisburg, the Pennsylvania capital, may try within weeks to impose losses on creditors to solve a fiscal crisis that threatens its solvency and has landed it in state receivership. Such a move might prompt other distressed US municipalities to pursue similar remedies.
Reuters: – Fed to buy bonds from more dealers under pilot program. – The Federal Reserve will buy bonds from a larger group of broker-dealers under a one-year pilot program meant to strengthen the U.S. central bank’s direct involvement in financial markets.
Barron’s: – Fed minutes show hawks squawking more loudly. – The Federal Reserve’s latest policy meeting minutes are out, and as expected they show the Fed’s anti-inflation, anti-credit bubble hawks continuing to pipe up a bit more, but still showing little in the way of fomenting imminent policy change.
WSJ: – Fed officials feared easy money could rattle markets. – Investors with exposure to traditional Treasuries will take a beating if bond prices begin to dip off their three decade long run and yields start to rise. Nevertheless, there are exchange traded fund options to help cope with the shifting tides.
Fundweb: – More investors fear corporate bond bubble. – There has been a significant increase in the number of investors worried about a bubble emerging in the bond market, research by CFA UK suggests.
Index Universe: – Franklin Templeton plans short bond fund. – Franklin Templeton, the San Mateo, Calif. based mutual fund firm, filed paperwork with US regulators to market its very first ETF, an actively managed fixed-income strategy that’s designed to cater to investors’ appetite for income.
Gross: Bond Vigilantes are no more. Central bankers are the masters of the universe but the question is: Are they vigilant?
— PIMCO (@PIMCO) February 20, 2013
Gross: Fed minutes:“Many” participnts concernd abt furthr asset purchases. 85bln/month appears 2 be @ risk later in 2013 if economy improves
— PIMCO (@PIMCO) February 20, 2013
In a day when commodities and stocks are going wild, #muniland mostly unchanged.
— Brian Chappatta (@BChappatta) February 20, 2013
Obama couldn’t find support for reinstating Build America Bond program, so he’s decided to call them “America Fast Forward” bonds instead.
— Bond Girl (@munilass) February 20, 2013