A US Treasuries vs. AAA Corporates Safe Haven Smackdown…..Where to Look for 8% + Corporate Bond Yields…and more!November 8th, 2012 by Simon G
Barron’s: – As yields approach parity, corporate bonds could be the new treasuries. – We’ve finally gotten to the point where corporate bond yields are so low that in some cases they’re starting to dip below the yields on the Treasury bonds against which they are benchmarked.
Bond Squawk: – If you think that corporate bonds are a safe haven, think again. – Yields on some corporate bonds are trading below their US Treasury counterparts suggesting dwindling credit risk in the bond market. What we are seeing is not a signal of a “new era” for the corporate bond market but a case of too many people chasing too few assets.
Dealbreaker: – Google bonds probably not going to replace Treasuries anytime soon. – By some indications US companies are in better shape than the US government, which is a major factor in the rush into corporate debt. So is it really safer to buy Google bonds than US treasuries?
Minyanville: Where you can still find 8% plus corporate bond yields - Some of the coal and steel names are yielding 8% to 10% or higher. There’s certain BBB investment-grade credits, such as the Telecom Italias and Telefonicas of the world, the telecommunication companies over in Europe, that have strong balance sheets, but again are kind of caught up in the mess of the European headlines. They’re yielding north of 7%.
Robert Keyfitz: Why holding an individual bond to maturity does not really eliminate interest rate risk – If interest rates rise, bond holders will indeed suffer a capital loss. But after that it makes no difference whether they decide to hold the same bonds or trade them for new ones. The original bonds will eventually recoup their capital loss but pay a lower coupon, while new bonds will realize the capital loss and have a lower par value, but pay a higher coupon.
Reuters: Jeff Gundlach on Apple stock and his expectations for increased bond market volatility - Gundlach thinks Apple is going to $425 and said that his DoubleLine Total Return Bond Fund has roughly 15 percent of its assets in cash and that he expects markets to become more volatile.
Motley Fool: – Bond market won big after the election. – Even as stocks teeter in the wake of the results of the election earlier this week, the bond market continues to perform as well as ever. With new concerns about a global economic slowdown, unrest in Europe, and the impact of Hurricane Sandy in the northeastern U.S., investors have taken flight to their traditional safe haven, even with interest rates already at rock-bottom levels.
Reuters: – Voters OK $30.8 billion of municipal bonds. – Voters approved at least $30.8 billion in new state and local government debt on Tuesday to pay for schools, roadways, parks and other infrastructure projects – a likely boost for the municipal bond market.
AdvsorOne: – Alice Schroeder on the Fiscal Cliff and the risk to Fixed Income. – Alice Schroeder, the Bloomberg columnist and former insurance analyst who knows all there is to know about Warren Buffett, offered advisors some sage advice—and a few warnings—about the outlook for the economy post-election day.
BusinessWeek: – Blackstone leads hedge funds attracting bond-rally bears. – Hedge funds that seek to profit from credit markets without wagering on the direction of prices are attracting the most new money in five years as skepticism mounts about whether a four-year rally in bonds can continue.
ETF Trends: – With the election over get ready for the fiscal cliff. – The election is over, but in some ways the landscape of the last few months is no different. In other words, the status quo and potential for gridlock over key economic issues remain.
Learn Bonds: – Peter Schiff on the crash still to come, foreign bonds, and how to fix the US Government. – An interview with Peter Schiff, author of Crash Proof a famous book which predicted the 2008 financial crisis. We discussed his new book The Real Crash, how investors can protect themselves with foreign bonds, and how the country could prevent the real crash from happening.
Barron’s: – S&P Warns of ‘Hot Money’ in High-Yield ETFs. – Standard & Poor’s is warning of “new and risky” dynamics in the market for high-yield bonds, owing to the entry of easy-to-trade exchange-traded funds.
Voice of San Diego: – State Treasurer pressuring bond companies to restructure school debt. – In his latest warning to the companies that put together hundreds of controversial school bond deals in California, state Treasurer Bill Lockyer is putting firms on notice that they should figure out how to restructure the debt or face significant consequences.
Cate Long: – Congratulations President Obama: Now here’s your muniland checklist. – President Obama deserves a few mornings to sleep in, and then it is time to get back to work. Upcoming federal tax and deficit reform have been grabbing headlines, but there are other D.C. policy reforms that could have a major effect on states and cities. These need to be on the president and Congress’ 2013 checklist.
Reuters: – US corporate bond new issues. – A list of upcoming high-grade and high-yield corporate bond offerings in the United States. The information was gathered from Thomson Reuters US new issues team, and other market sources.
Bloomberg: – Treasury bond demand most this year on fiscal-cliff concern. – Treasury 30-year bonds climbed for a second day as concern policy makers risk pushing the economy into recession over a showdown on the budget buoyed demand at a government auction of $16 billion of the securities.
Gross: U.S. has a grand canyon budget problem beyond the fiscal cliff. $1.5 trillion fiscal gap needs rebalanced long term, not $400 billion
— PIMCO (@PIMCO) November 8, 2012
Pimco’s Kashkari “Fed is trying to engineer 3 to 3.5% inflation… and keep control of the long end of the curve” #bbmash
— Cate Long (@cate_long) November 8, 2012
— Cate Long (@cate_long) November 8, 2012
Prospect of high taxes & perhaps limited #muni market in future is apt to support additional issuance and lower yields through year end
— Muni Market Advisors (@Muni_Mkt_Advis) November 7, 2012
the “bond king” is leaving his footprints all over the municipal bond market – especially in the belly…when is Jeff G coming in?
— Michael Pietronico (@MillerTabak) November 8, 2012