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Category Archives: Bond Market Perspectives

Banking on Bank Loans

As 2012 comes to a close, bank loans (a.k.a., floating rate funds) are increasingly becoming an attractive alternative to high-yield bonds. While we still continue to find high-yield bonds one of the most attractive sectors in the bond market, the relative appeal of bank loans has improved as we look toward 2013…

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Banking on Bank Loans

Investors Elect for Municipals

The prospect of higher taxes gave municipal bonds a strong lift following election results last week and keeps municipal bonds on pace to outperform their taxable bond counterparts for the second consecutive year. The re-election of President Obama and status quo in Congress increases the likelihood of higher tax rates on upper income earners. The tax-exempt interest income of municipal bonds becomes…

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Investors Elect for Municipals

Fourth Quarter Bond Market Outlook

The best days of 2012 have likely already passed for bond investors. During the third quarter of 2012, most bond sectors witnessed price gains that helped push the broad Barclays Aggregate Bond Index to a 4.0% year-to-date return, the upper end of our low-to-mid single-digit total return forecast initially…

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Fourth Quarter Bond Market Outlook

Pension Paranoia

This week the Government Accounting Standards Board (GASB) announced new guidelines on how state and local pensions are reported, potentially reigniting municipal bond credit quality fears. The changes, initially proposed a year ago, were anticipated but officially announced Monday. The new rules are intended to improve transparency for individuals and investors on pension liability reporting. The news follows a report from…

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Pension Paranoia

Repeat Performance

Is a repeat performance in store for bond investors this week? That is the question on the minds of investors as the Federal Reserve (Fed) meets this week and investors await news of additional bond purchases, known as quantitative easing or QE. High-quality bond prices have done just fine on their own, but in an attempt to reinvigorate the economy…

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Repeat Performance

Spanish Setback

Despite an awaited bailout for Spanish banks, Treasuries resumed their rally Monday after a one-week hiatus. The lack of detail in the loan package that may come from either the European Financial Stability Fund (EFSF) or perhaps the permanent European Stability Mechanism (ESM) when it comes online July 1, 2012, weighed on the minds of investors. Last week…

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Spanish Setback

Record Rate

The 10-year Treasury yield accelerated to a record low of 1.45% after plunging through the prior 1.7% low like a hot knife through butter [Figure 1]. For most of the month of May, the 10-year Treasury yield hovered between 1.7% and 1.8%, the low end of a nine-month range, before powering lower. The last time yields were near this low was immediately following World War II…

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Record Rate

The Global Yield Limbo

Treasury yields were little changed last week hovering near record lows, but that did not stop a number of key benchmark government bond yields from reaching record lows. Ten-year government bond yields in Germany, England, Japan, France, Holland, Canada, and Austria all reached respective record lows last week [Figure 1]. Ten-year government yields in New Zealand and Switzerland hit record lows in the prior week. Bond investors are confronted with a lower bar to dance under.…

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The Global Yield Limbo

Seasonal Slowdown

After a strong start to 2012, the municipal bond market may be due for a pause or at least another breather. In late February 2012, we cautioned that the municipal bond market was due for a breather as the combination of good recent performance and future hurdles may lead to a slowdown or pullback…

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Seasonal Slowdown

Treasury Momentum

Treasuries continue to enjoy a spring renewal with prices continuing their slow inexorable march higher and the 10-year Treasury yield approaching the low end of the long-standing trading range [Figure 1]. Since September of last year, the 10-year Treasury yield has…

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Treasury Momentum