PIMCO Says Obama Will – and Should – Tax Rich…Out of High Yield and Into Bank Loans…and more!November 13th, 2012 by Simon G
CNN Money: – PIMCO’s Mohamid A. El-Erian; Obama will tax the rich more. – President Obama will – and should – insist on increasing taxes for the highest-earning brackets. Republicans will shout and scream but end up going along, thus avoiding an economic debacle.
ETFTrends: Yield hungry investors rotate out of high yield bond ETFs and into bank loan ETFs - For example, since the end of September, investors have pulled $607.6 million from iShares iBoxx High Yield Corporate Bond (NYSEArca: HYG) and $532.5 million from SPDR Barclays High Yield Bond (NYSEArca: JNK), according to IndexUniverse flow data. Since then, they have added $405.1 million to PowerShares Senior Loan Portfolio (NYSEArca: BKLN).
Barrons: Morgan Stanley says bull market in bonds not over yet - - “Obviously the bull market in bonds will end at some point, but I don’t think it’s going to happen any time in the next year or so.”
Alliance Bernstein: Why you may want to sell some of your long term premium municipal bonds - When interest rates descend, long-term callable bonds rally like intermediate-term bonds—because they are priced to their call dates. Conversely, if interest rates take flight, long-term callable bond values are likely to fall sharply as they begin to price to their long maturity date.
Reuters: How a vicious circle of self-interest sank a California city - San Bernardino succumbed to a vicious circle of self-interests among city workers, local politicians and state pension overseers.
Bloomberg: – Puerto Rico voting out Fortuno drives debt cheaper. – Investors have pushed Puerto Rico bonds to the cheapest in more than two years after Republican Governor Luis Fortuno, who cut workers and deficits, lost his re-election bid.
CNBC: – Tax uncertainty puts muni bonds back in the spotlight. – The outcome of the general election and the looming “fiscal cliff” have put the municipal bond market in the fixed income spotlight, as investors and analysts speculate about higher taxes and how they will impact the tax-friendly bonds preferred by high-income earners.
About.com: – October 2012 and year-to-date bond market returns. – October was a relatively quiet month for the bond market, but the dominant trend of 2012 – outperformance for corporate, high-yield, and emerging market bonds – remained firmly in place.
Coffee & Markets Podcast: – The problem with all those municipal bonds on your ballot. – Brad Jackson and Ben Domenech are joined by Cate Long to discuss the overuse of municipal bonds by cities and the problems that is causing, the Obama administration’s plan to begin taxing investment in these bonds and looming state bankruptcies.
Pensions & Investments: – High-yield bonds return to forefront, a “huge departure’ from strategies of past year. – High-yield bond strategies mostly dethroned long-term bond strategies for the year ended Sept. 30, according to the best performing fixed-income managers’ rankings in the Morningstar Inc. separate account/collective investment trust database.
The Muni Guy: – Detroit finances may get even worse, fiscal board is warned. – Detroit’s financial condition is deteriorating more quickly than projected, and without an infusion of money from the state, the city could run out of cash by mid-December, a top city official told the board that has significant oversight of the city’s finances.
Learn Bonds: – 101 free resources for bond investors. – No need for a Bloomberg terminal, here’s 101 places you can find free information on the bond market.
ETF Trends: – Skittish investors are piling into pair of Treasury bond ETFs. – With fixed income markets closed yesterday in honor of the Veteran’s Day holiday but with their index linked ETFs trading in the equity markets nonetheless on Monday, it seems appropriate to highlight something in this space today.
Bond Squawk: – Enhance returns in managed health care sector by rolling down the yield curve. – Since the Presidential election, managed care health care stocks have been battered on concerns that profit margins will be squeezed. The re-election helped clarify the future of health care overhaul which should cover millions of uninsured people and will result in higher fees and coverage restrictions for the insurance providers.
ETF Trends: – Income-producing ETFs back in focus as bond yields fall again. – Treasury yields are falling again as President Barack Obama’s re-election has boosted speculation that the Federal Reserve will stick with quantitative easing and bond buying. Renewed fears over Greece and the Eurozone debt crisis have also pushed investors into Treasuries with yields on the 10-year note falling back to the 1.6% range.
But I’m certainly not suggesting to anyone to buy Puerto Rico debt. Too risky. #muniland
— Cate Long (@cate_long) November 13, 2012
Gross: Making money w/ money increasingly difficult w/ near zero yields. Go light on banks, insurance, REITs & other finance companies.
— PIMCO (@PIMCO) November 13, 2012
With so much cash pouring in and only minimal supply coming, all-time lows should go lower this week -ziegler
— Taylor Riggs (@TaylorRiggs_BB) November 13, 2012
In current muni market, Harrisburg incinerator debt can be refinanced at 2.5%, RBC rep says.
— Romy Varghese (@romyvarghese) November 13, 2012