US Bank Bond Yields Poised to Move Below Industrials…Moody’s Downgrades 6 Canadian Banks…and more!January 28th, 2013 by Simon G
Bloomberg: – Bank bonds poised to recapture pre-crisis yield eminence. – Banks are poised to overtake industrial companies as the safest borrowers in the $5.1 trillion US corporate bond market for the first time since the start of the worst financial crisis since the Great Depression.
WSJ: – Moody’s downgrades six of Canada’s big banks. – Moody’s Investors Service has downgraded the long-term ratings of six Canadian financial institutions, citing concerns over high levels of consumer debt and the risks of a drop in housing prices.
Bloomberg: – Municipal bond regulator seeks to provide debt indexes to public. – The Municipal Securities Rulemaking Board, which crafts rules for the state and local government bond market, said it plans to provide benchmark yields available on its website that reports securities trades.
Learn Bonds: – Be wary of Dell’s unusually high bond yields. – In today’s ultra-low-interest-rate environment, A2/A- rated corporate debt with yields as high 6.834% may seem like a no-brainer investment. But in today’s low interest-rate environment, an A2/A- corporate bond rating does not warrant yields as high as that. So why do Dell’s bonds have such high yields?
Cate Long: – Illinois on the downward slope. – There are several reasons why raters view Illinois so negatively. The state’s spending is way out of line with its revenue and its deficit is about 25 percent of its annual budget. Unlike the federal government, Illinois cannot endlessly issue new bonds to cover annual shortfalls. Instead, the state simply delays paying its bills from year to year.
TheStreet: – The death of bond ETFs? Change your fixed-income lenses. – Normally, you might hear more discussion about complacency and/or an imminent selloff. Instead, you’re hearing more about the “Great Rotation” out of bonds and into stocks.
LiveMint: – Funds are flowing out of US govt bonds into emerging markets. – Funds continue to pour into emerging markets as investors exit from US government bonds and seek out high-risk equity assets for protection against inflation. The Indian markets as well as emerging market equities have been rallying while US bonds prices have fallen 2% in the past month.\
Index Universe: – iShares plans maturing-corp-bond ETF line-up. – iShares, the world’s biggest exchange-traded fund company by assets, looks to be planning an expansion of its presence in the relatively unexplored pocket of target-date maturity bond ETFs, with a series of regulatory filings over the past several weeks detailing corporate bond funds that will expire once all the bonds in a given portfolio mature.
MarketWatch: – Proposal to limit value of municipal bond exemptions at 28% instead limits future economic growth essential to addressing nation’s fiscal crisis. – An analysis released today by the Municipal Bonds for America (MBFA) coalition concludes that a proposal favored by the Obama Administration and some in Congress to establish a 28% limit on the value of deductions and exemptions would do little to help solve the nation’s fiscal crises while raising borrowing costs for state and local governments.
Barron’s: – Corporate-bond perplexity spreads. – Nearly a month into 2013, many investors aren’t sure of what to expect from corporate bonds this year.
Charles Margolis: – Don’t trip over erroneous BNY bond listing. – The secondary bond market lists a set of 2017 BNY Mellon bonds with a very impressive 5.28% yield. The only problem is, the listing appears to be totally erroneous.
Business Insider: – The curse of the new HQ! – We’ve written about the curse of the new HQ before on Business Insider. The basic premise is this, you open a new HQ and then your stock heads for a dive. Well PIMCO is just about ready to move into their new HQ. So what does that mean for bond markets?
Business Insider: – The bear ‘pile on’ is beginning in the US Bond Market. – Current market positioning for bonds has turned to an overall bearish bias as four out of the six key investor types we track had bearish flows in their latest updates.
Financial Post: – Municipal bond ETFs help investors keep up with the pros. – Investors are directing a record amount of cash into US municipal-bond exchange-traded funds and are poised to add more, helping to keep borrowing costs for local governments close to four-decade lows.
Minyanville: – The Perfect storm is heading toward the debt market. – In the debt markets, it’s starting to look like the 100-year wave is just over the horizon and I’m left with a sensation that the question is not “if” it is coming but “when.”
Morningstar: – Why are investors buying bonds? – Yields have never been lower, but investors continue to flock to bond funds, according to Morningstar asset flows data. The taxable-bond fund group gained more than $260 billion in new assets in 2012, on top of $50 billion in new inflows in 2011, and munis gathered an additional $50 billion in new assets last year.
Futures.com: – Ten-year Treasury yield rises to 2% for first time since April. – Treasury 10-year note yields touched 2% for the first time since April as orders for durable goods in the U.S. rose more than forecast, another signal the U.S. economic recovery may be strengthening.
ETF Trends: – Muni bond ETFs: Got credit? – Moody’s, S&P and Fitch are the companies whose analyses of the legal, contractual and moral promises made by issuers result in a scorecard grade that may suggest the likelihood of full and timely repayment of their debts. I think it is a good time to revisit some of these important details, lest we lose sight of what brings strength to this market.
ETF Trends: – Emerging market ETFs attractive on growth, valuations. – BlackRock Chief Investment Strategist Russ Koesterich is encouraging U.S. investors to drop their home bias and consider emerging market ETFs that offer better economic growth rates and more attractive valuations.
Bloomberg: – Fitch Says US debt-suspension removes risk of downgrade. – Fitch Ratings said the temporary suspension of the US debt limit removes the near-term risk to the nation’s AAA credit rating.
Gross: Bond yields depend on how long Fed stays low & when/if U.S. reaches 6.5% unemployment, 2.5% inflation. My estimate: 2015.
— PIMCO (@PIMCO) January 28, 2013
Bond meltdown loometh RT @ftglobalmarkets 10-year Treasury yield hits 2% for first time since April after solid durable goods data.
— Chris Adams (@chrisadamsmkts) January 28, 2013
10yr TIPS at -54bps, the least negative yield since August
— David Schawel (@DavidSchawel) January 28, 2013