Treasuries Stung by Retail Sales…Gross’s BOND Victim of Own Success… Junk Sale in Limbo After Deaths… and more!

March 13th, 2013 by

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WSJ: – Treasuries stung by retail sales. – Better-than-expected US retail sales brightened the economic outlook, sparking a flight out of Treasury bonds.

ETF Trends: – Cash influx may cool PIMCO Total Return ETF’s outperformance. – The PIMCO Total Return ETF (NYSEArca: BOND) captained by Bill Gross has grown to the largest actively managed exchange traded fund, gathering $4.5 billion since its March 2012 launch. As the ETF continues to grow in size, analysts are warning investors to temper their performance expectations after BOND blew away its benchmark and mutual-fund counterpart during its first year.

Bloomberg: – Biggest junk sale in limbo after deaths in US war. – The largest-ever U.S. municipal junk bond sale remains in limbo after Indiana learned that a Pakistani company backing a fertilizer plant financed by the biggest borrowing in state history is linked to explosives causing the most U.S. casualties in Afghanistan.

The Boston Globe: – Retirement investing shift relies more on mix of assets. – Building an investment portfolio that produces enough income to live on is one of the main goals of retirement planning, but lately the goalposts have shifted. With interest rates stuck near record lows, retirees must have more saved up to produce the same income through the usual high-quality investments, like Treasury bonds, or else they must venture into assets with higher yields but potentially higher risk.

Learn Bonds: – Why interest rates will rise a lot well before the Federal Funds Rate is raised. – There is a belief among some people that interest rates will not increase significantly until the Fed (Federal Reserve) raises the federal funds target rate from its current 0-0.25% level, which does not figure to occur until about the second half of 2015.  This is definitely a misconception.

Bond Buyer: – APPA Opposes Taxes on Munis, Including Direct-Pay Bonds. – The American Public Power Association (APPA) has adopted a resolution opposing all taxation of municipal bonds, including subsidized direct-pay bonds and traditional tax credit bonds.

Anthony Valeri: – Bond market perspectives. – Bond yields are back to the highs of the year after gains from the prior week were more than erased. A stronger-than-expected employment report, continued stock market strength, and reduced fiscal uncertainty pushed the 10-year Treasury yield back to 2.06%. The municipal bond market, struggling with its own unique circumstances, was also impacted by taxable bond weakness. Taxable and tax-free yields are at their highs of the year.

FT Adviser:  – Shift from gov’t and corporate bonds. – Advisers have been moving client assets away from government and corporate-bond heavy portfolios and into equity income, figures from Cofunds have shown.

Financial News: – Unrated bonds reveal yield hunger. – Unrated bond issuance is increasing as investors continue the search for yield while investment-grade corporate yields remain historically low.

Horan Capital Advisors: – Bonds continue to deliver painful results for investors. – Much has been made about investors turning on the equity buying spigot since the beginning of the year. Investors appear to be allocating as much of their investment dollars to bonds as they are to stocks. This allocation decision seems to be based on investors redeploying cash that was held taken out of the market in the run up to the presidential election and the fiscal cliff.

Tulsa World: – Tax changes could hurt municipal bonds. – The battle that took place over the “fiscal cliff” foreshadowed the current fights that Congress and the president are having over taxes and spending as Congress bumped up against the March deadlines on raising the debt limit, funding the government and automatic spending cuts that were delayed as part of the fiscal cliff deal.

Platts: – US representative to pitch resolution on municipal bond tax treatment. – With public utilities ramping up concerns that the century-long federal tax treatment of municipal bonds could be at risk, a member of the House of Representatives plans this week to introduce a resolution to gauge support for the federal tax exemption for municipal bond interest.

Trading Floor: – High yield corporate bonds, more value? – There is an ongoing discussion about whether corporate high yield bonds have become too expensive and whether investors are aware of the potential risks in some of these bonds. In other words: have risk premiums diminished because of an exaggerated demand for higher yields?

Artemis: – Florida Citizens return to cat bond market with Everglades Re 2013. – As expected Florida’s Citizens Property Insurance, the state backed property insurer of last resort, is bringing its second catastrophe bond issuance to market with a new Series 2013-1 tranche from its Everglades Re Ltd. special purpose insurer. Florida Citizens had been planning to increase its spend on private market risk transfer and reinsurance this year, and a recent board meeting resulted in approval to pursue another catastrophe bond issuance.

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