Puerto Rico Bonds in Trouble?…Fund Managers Dump Treasuries for Corporates…and more!August 30th, 2012 by Simon G
Best of the Bond Market for August 30th, 2012
Bond Buyer: – Puerto Rico Credit Spreads Widen Dramatically. – Credit spreads on Puerto Rico bonds have widened dramatically in recent weeks compared to similarly rated municipal bonds that have seen spreads shrink as investor’s bottom-fish for yield among lower-rated securities.
Reuters: – Fund managers looking towards investment-grade bonds. – With signs the economy is continuing to improve, U.S. fund managers increased their stake in investment-grade corporate bonds and U.S. stocks in August, while reducing their exposure to U.S. Treasuries, a Reuters poll showed.
Cate Long: – Be dubious of opaque muniland data. – We need as many voices as possible discussing the fiscal condition of the states. But it’s important that the political motivations and funding of those engaged in public debate are made transparent.
Barron’s: – High-yield ETFs drive one tenth of bond-trading volume. – There’s a lively debate over whether the market for high-yield bonds is a good fit for passive index trackers, such as fast-growing exchange-traded funds. Investors have given their answer: We don’t see a problem.
Alliance Bernstein: Is CCC Credit Worth the Risk? - It’s possible to generate attractive returns in all but the strongest bull markets by simply sticking to higher credit-quality bonds.
Bond Squawk: – U.S. economy outlook remains mixed but there are signs of hope. – The U.S. economy expanded more in the second quarter of 2012 than initial reports suggested. The Department of Commerce released a report that second quarter GDP growth came in at 1.7%. This is an improvement from the initial report of 1.5% reported in July.
Learn Bonds: – How to choose a corporate bond for income. – One of the main reasons to buy individual corporate bonds instead of bond funds is income. While both bond funds and individual corporate bonds deliver income, an individual bond will provide a fixed dollar payment on a regular basis, which does not fluctuate.
Bloomberg: – San Bernardino still short of $16 million even after staff let go. – San Bernardino the third California city to seek bankruptcy protection this year, will still have a $16.4 million hole in its budget even after laying off 100 workers.
123Jump: – Picking bonds contrarian style. – Corporate bonds can be lucrative for disciplined investors with a systematic valuation model applicable to sectors and businesses. Gregory L. Tornga and his team of analysts at Edge Asset Management, drill down sectors to find out-of-favor companies whose management teams have a history of enduring through various business cycles.
Bandon Capital Management: The Danger of Complacency in Fixed Income Investing- Investors should evaluate alternative fixed income strategies with more attractive return profiles that have similar correlation and volatility characteristics to high quality fixed income
Muni Net Guide: – Job seekers still looking for government jobs despite belt tightening. State and local governments may be tightening their belts to close budget gaps and pension shortfalls. But that hasn’t stopped people applying for jobs within the public sector. Paul Dietl, Chief Human Resources Officer for the Commonwealth of Massachusetts says he has not seen any evidence of waning interest in state employment by qualified professionals.
“I’ve been working in bondmarkets for more than 2 decades, right now may be most interesting time to be on front lines,” commented Bagley.
— Cate Long (@cate_long) August 30, 2012
Gross: Today’s core inflation # of 1.6% YOY is another justification for QE3.
#Bernanke stresses dual mandate and 2% target rate.
— PIMCO (@PIMCO) August 30, 2012
— Muni Market Advisors (@Muni_Mkt_Advis) August 30, 2012