Muni Defaults 36 Times Previous Estimates?….Who’s Buying all the Treasuries…and more!August 15th, 2012 by David Waring
NY Fed: Municipal bond default rate is 36 X higher than previously reported - Rather than confirming Moody’s 71 listed defaults from 1970 to 2011, our database shows 2,521 defaults during this same period.
Marc Joffe Comment: That’s still pretty low.
David Merkel Comment: Tell us something we don’t already know.
The “unreported” muni defaults you uncover are miniscule by market value, and many are corporate backed …@libertystecon
— bart mosley (@bondgeek) August 15, 2012
Zero Hedge: Think China and the Fed have been buying all the treasuries? Wrong.
Business Insider: Interest rates fly as the stock market snoozes. – A theory that’s going around is that this has something to do with the Fed not doing QE, and thus not doing much to suppress rates. But we’re skeptical, since rates have tended to rise during QE.
Learn Bonds: How to choose a municipal bond fund – Step by step instructions.
Bondsquawk: 9 high yielding “rising stars” to consider for your portfolio. - As prospects for these bonds improve, these “rising stars” may rise in price as yields decline to match those of their soon-to-be peers in Investment Grade space.
Deutsche Borse Group: Fed’s Fisher is concerned what’s going to happen when they Fed starts selling all these bonds? - Fisher said the Fed could be causing distortions in the market now, but added, “I’m not worried about that now. I’m worried about when we’re on the sell side and how might that distort particularly the price structure.”
Mike Shedlock: Yesterday’s retail sales beat in question as California sales tax collections fall 40%. - Sales taxes collections off 33.5% vs. budget and 40% from a year ago is not a “timing issue”. Either California data is extremely messed up, or retail sales nationally will be revised sharply lower.
Blackrock: Municipal bond rates are at historical highs when compared to corporate bond rates. – Municipal bonds are currently yielding 89% of their corporate bond counterparts, and thats without the tax advantage included. The historical average is 75%.
Businessweek: A 35 year old junk bond fund is outperforming both PIMCO and Blackrock by ignoring the rating agencies. - Krug’s $5.7 billion Ivy High Income Fund (WHIAX) rose 9.8 percent in the past five years after adjusting for price swings, the best among 27 junk bond funds holding more than $2 billion in assets.
Marketwatch: In a typically slow month for corporate debt issuance, we are on track to double the monthly average in august – Half-way through the month, companies have sold $45.5 billion in high-grade debt, close to the monthly average of $48 billion, he said. High-yield bond sales in August average $7 billion.
Also Sprach Analyst: Inflation in the US, China, Euro Area, and the UK is headed in the same direction. – down.
loving the sensationalistic headlines about the ny fed finding ::gasp:: higher default rates in unrated munis #muniland
— Muni Trader (@MuniTrader) August 15, 2012
not saying go short MUB, just saying the sector is no longer the no-nonsense buy it was a couple of months ago.
— Morally Bankrupt (@groditi) August 15, 2012
Hy spread vs IG spread 20bps off YTD lows. Risk is for decompression. Sell HY here.
— JunkBondMom (@junkbondmom) August 15, 2012
— PIMCO (@PIMCO) August 15, 2012
Buyers of the 30yr at 2.45% now down 8.2% or 3.3 years of income
— David Schawel (@DavidSchawel) August 15, 2012