What’s in Your Emerging Market Bond ETF?…Bernanke Reassures on Bond Purchases…CA Budget BS…and more!February 26th, 2013 by Simon G
ETF Database: – What’s in your emerging market bond ETF? – While targeted emerging country bond ETFs can be a great holding for investors who are well versed in the political and economic landscape of the country, those looking to break into the fourteen existing emerging market bonds should take time to make sure their “broad exposure” ETF is really that.
SF Gate: – Bernanke signals continued support for low rates. – Ben Bernanke sent a message Tuesday to Congress: The Federal Reserve’s low-interest-rate policies are giving crucial support to an economy still burdened by high unemployment. Economists said Bernanke made clear the Fed has no plans to scale back its pace of bond purchases.
SacBee: – California budget boasting ignores huge debt. – Gov. Jerry Brown has started touting California as a model for fiscal soundness — a scenario that makes sense only if you ignore a big backlog of debt.
Learn Bonds: – Strategies for the current low and rising interest rates environment. – No one knows for certain whether interest rates will rise or fall, how much they will rise or fall, and how quickly they will rise or fall. The odds are far in favor of interest rates rising though. The key question for investors is: “What actions should I take in response to this situation?” Here are some good strategies that investors can use in response.
BCA Research: – US Corporate Bonds: Move down in quality. – We are anticipating a fairly significant bear-steepening in the Treasury curve. Historically, in such an environment, it proved beneficial to move down in credit quality in the corporate bond market. In short, the balance of risks supports moving down in credit quality in the corporate bond market.
Daily Markets: – High yield, global corporate bonds, Emerging Market debt seen as attractive fixed income investments. – High yield bonds, global corporate bonds and emerging market debt are among the areas of opportunity for fixed income investors in 2013, according to Standish Mellon Asset Management Company LLC, the fixed income specialist for BNY Mellon.
About.com: – Worried about Bonds? We have you covered. – If you’re beginning to worry about the safety of your investments following the recent flood of coverage on the “bond market bubble,” you may be wondering just what issues have so many people predicting doom and gloom for the market. If that’s the case, these three articles can shed some light on what has the experts so concerned.
Bloomberg: – Fed faces explaining billion-dollar losses in QE exit stress. – Federal Reserve Chairman Ben S. Bernanke’s efforts to rescue the economy could result in more than a half trillion dollars of paper losses on the central bank’s books if interest rates rise abruptly from recent levels. That sum is the difference between the value of securities in the Fed’s portfolio on Dec. 31 and what they may fetch in three years.
Morningstar: – Equities retreat as corporate bonds hold. – With real interest rates at negative real yields for over the next five years, investors would have to be willing to lock in an even greater erosion of the purchasing power of their assets to drive interest rates lower. So what could shake the credit markets’ sanguine disposition in the near term?
WSJ: – Treasurys hold gains on Bernanke comments. – Treasurys held slim gains as newfound concerns about Italy’s government offset reassurances by Federal Reserve Chairman Ben Bernanke that the central bank will continue supporting the economy.
Barron’s: – UBS sees value in IGI high-grade corporate CEF. – There’s not much these days to recommend investment-grade corporate bonds, which have been likened to higher-yielding Treasuries offering incrementally better income but similarly elevated interest-rate risk. Against this backdrop, UBS is out with a report looking at Western Asset Investment Grade Defined Opportunity Trust, (IGI) a non-leveraged investment grade fund that UBS calls “an attractive way to play the investment grade corporate bond market,” bestowing IGI with a buy rating.
ETF Trends: – Muni bond ETFs: Rotations and bubbles. – Is all this talk about bond bubbles and the “great rotation” missing the point? James Colby, portfolio manager and senior municipal strategist at Market Vectors ETFs, thinks so.
ETF Trends: – Treasury ETFs catch a bid in risk-off trade. – Among the largest gainers yesterday on a steep equity sell-off were long dated Treasury Bond ETFs on what looked like a “risk-off” day based on the flurry of activity.
Index Universe: – The coming competition in the target date maturity bond ETF space. – It was only a matter of time before another ETF company decided to take on Guggenheim’s innovative “BulletShares” franchise of target-date maturity fixed-income bond funds.
Reuters: – Is there a bubble in corporate bonds? – Federal Reserve Board Governor Jeremy Stein, surprised Fed-watchers in his latest speech by focusing entirely on the risks of recent monetary stimulus and saying very little about its benefits. In particular, Stein, a corporate finance expert, raised the possibility that a bubble might be forming in the corporate bond markets, which has seen yields fall to record lows and issuance to record highs. While the speech was riddled with caveats, Wall Street took it as an unusually stern warning about the potential side effects of quantitative easing from Fed’s inner-sanctum.
Muscatine Journal: – Don’t change bond rules. – A provision recently proposed by the Obama Administration in the Fiscal Year 2013 budget request, if enacted, could have a significant adverse effect on Muscatine Power and Water’s utility rates, along with the fiscal health of our state and local governments and the condition of the nation’s infrastructure.
WSJ: – Bond auction draws decent demand. – The US government attracted decent demand for its five-year Treasury auction, though more-aggressive bids were likely held back by a recent sharp run-up in prices.
Gross: Weaker #Yen and BOJ will drive global asset markets in future for better or worse. Yen down/risk on. Yen up/ risk off.
— PIMCO (@PIMCO) February 26, 2013
Average 5-yr Treasury auction & not driving #bonds. Dovish Bernanke comments & peripheral euro bond weakness lifting Treasuries.
— AnthonyValeri (@Anthony_Valeri) February 26, 2013
#Muni ratios have increased to prepare for more supply: 10yr ratio nearing 100% again.
— Fixedology (@Fixedology) February 26, 2013