New SEC Chief Has Muni Market Focus…Puerto Rican Tremors…Full Guide to Fiscal Cliff and More!November 27th, 2012 by Simon G
MarketWatch: – Obama’s SEC pick Walter has muni-bond focus. – The surprise choice to lead the Securities and Exchange Commission has focused much of her time at the agency on the $3.7 trillion municipal-security market.
ETF Trends: – Will new SEC chief Walter derail muni bond ETF rally? – Muni ETFs are at multiyear highs with expectations taxes will rise next year providing the asset class with a tailwind after Obama’s re-election. The tax-exempt status of muni bonds would be even more attractive if taxes go up. However, this week’s appointment of Elisse Walter to head the SEC could force institutional investors to take pause.
NY Times: – Fierce debt puts pensions at Risk in Puerto Rico. – Though many of Puerto Rico’s problems are reminiscent of Greece’s — tax noncompliance, a stagnant economy, years of issuing long-term debt to cover short-term payments — investors have had a nearly insatiable appetite for its bonds. But now their support is dwindling.
Washington Post: – Absolutely everything you need to know about the fiscal cliff. – Washington is engaged in an all-consuming debate about how to resolve the “fiscal cliff” — which we like to call, for reasons that will soon be explained, “the austerity crisis.” But what is that and why does it matter?
TF Market Advisors: Greece and other reasons to be less bullish – Greek deal not as good as it appears.
Bespoke Investment Group: State default risk continues to lighten - default risk for all four states has been trending lower all year, even when the stock market corrected this spring and fall. We saw increases in default risk during last year’s market correction, but that hasn’t been the case this year.
Bondsquawk: Recent break in treasuries points to further rally - with the latest weakness in risk assets as market watchers point to uncertainty surrounding the Fiscal Cliff, yields have broken below this sideways trend in a flight-to-quality bid and may challenge the recent lows.
Detroit News: – Detroit teeters on the edge of bankruptcy. – The biggest mystery surrounding Detroit’s imminent financial collapse isn’t whether or how exactly it will go bankrupt, notwithstanding Council President Pugh’s confident assertions to the contrary. It’s when, and how steep a price will be paid by city residents, employees, retirees and business leaders witnessing municipal self-mutilation in real time.
WSJ: – Corporate Treasurers rush to beat the clock. – Debt issuance from high-grade companies was set to top $100 billion in November on Tuesday as cautious treasurers move to feed a hungry market and act fast in case borrowing costs and tax rates jump in 2013.
MNI: – US Muni bond market stable despite default scare. – The US municipal bond market has been fairly stable, despite recent dire predictions that municipalities could default in droves, Dennis Lockhart, President of the Federal Reserve Bank of Atlanta, said Tuesday.
Bloomberg: – Dealers Build Bond Inventories Fastest Since ’07. – The biggest banks are boosting their corporate-bond stockpiles at the fastest pace since 2007, supporting a market that’s generating losses for the first time since March and keeping a record volume of debt sales on track.
Learn Bonds: – What bond fund flows tell us about municipal bonds. – Flow data (the amount of money coming into or out of an individual fund or group of funds over a period of time), is used by many investors as a forward looking indicator of future price movements. For example, if a particular type of fund is getting more deposits each month that might be a sign that prices will be rising. Learn more about how you can use bond fund flows here.
Barron’s: – Bond yields may fall short of corporate pension fund needs. – As corporate pension plans and other investors keep piling into longer-dated corporate bonds, seeking better-than-Treasury yields to match their future liabilities, those corporate bond yields keep falling. That’s setting up a longer-term problem for pension plans.
FT Advisor: – How low can bond spreads go? – When investors look back in five or 10 years’ time they will be pleasantly surprised by the returns they have achieved from their fixed income investments.
Reuters: – Bankrupt San Bernardino to halt payments to Calpers, bondholders. – Bankrupt San Bernardino, California, voted on Monday to present a plan to a bankruptcy judge that seeks to balance its budget through deferring payments to the state’s public employee pension fund and to the city’s bondholders.
CFO Journal: – Companies confront a bond puzzle. – Big corporate pension plans are expected to snap up so many high-grade corporate bonds in the coming years that they could absorb much of the new supply coming to market. The heavy demand could leave long-term corporate bond yields extremely low relative to other debt, regardless of what the Fed does with short-term rates.
WSJ: – California bonds get another look. – California has long ranked second only to Illinois in the dubious honor of being the least-loved state among municipal-bond investors. But since Election Day, some investors have had a change of heart.
Gross: WSJ Op-ed confirms PIMCO thesis: U.S. debt is 5 times what it admits to. Inflation ahead.
— PIMCO (@PIMCO) November 27, 2012
inflows into nat’l muni bond funds down to $902mm (originally $1.7bn). total inflows for funds reporting weekly down to $1.1bn from $1.8bn
— Taylor Riggs (@TaylorRiggs_BB) November 27, 2012
Cash Rules: $7.74B flows out of equity funds globally in wk ended Nov. 21; bond funds take in $4.97B; money funds take in >$21B, EPFR Global
— Daisy Maxey (@DaisyMaxey) November 27, 2012