| F.A.C.O. |
| 07/21/25 | | Bonds |
"Will the Fed cut rates in July? We're not sure. But we believe mounting fiscal pressure and Powell's desire to hold the market together will eventually force their hand. While many see the return of easy money as bullish, we believe it's unnecessary and risks causing additional asset inflation, bond market instability, and voter backlash. In the end, whether cuts are justified or not, we expect the Fed will cave. When it comes to letting free markets discipline Wall Street, speculators, and politicians, the Fed Always Chickens Out."
|
| Reconsidering core bonds |
| 07/05/25 | | Bonds |
"In today's environment, with spreads near historic lows and credit risk offering very little reward, investors may want to reconsider whether the Agg still deserves its traditional role in the portfolio. Treasuries may offer a cleaner, safer, and more tax-friendly alternative for core bond exposure. And for those seeking more, there are smarter ways to pursue additional yield and return without taking on the asymmetric risks that come with credit-heavy bond allocations."
|
| Why a 4.4% yield might barely deliver |
| 04/21/25 | | Bonds |
"At first glance, a 4.4% bond yield seems attractive, especially after years of near-zero interest rates. But hidden beneath the surface, taxes and inflation are silently eroding your returns. By the time they take their cut, that 'safe' yield could leave you with nothing- or worse, less than you started with."
|
| U.S. floats idea of defaulting on treasuries |
| 02/10/25 | | Bonds |
"imagine thinking that by downloading a ton of data and having a few days to analyze it you could make the determination that a significant amount of the U.S. national debt wasn't real and didn't have to be paid."
|
| Remember the global financial crisis |
| 11/24/24 | | Bonds |
"16 years later, some experts believe new risks are emerging. And this time, they are linked to highly indebted companies backed by private equity firms, which are part of the growing but opaque portion of the financial system known as the shadow banking sector."
|
| Shorting credit |
| 11/18/24 | | Bonds |
"today, we want to write about shorting credit. Let's start with why shorting credit might be a horrible idea."
|
| Bonds back in play |
| 10/06/24 | | Bonds |
"We found that after periods of declining stock-bond correlations, a 60/40 portfolio tends to outperform an all-equity portfolio on both an absolute and risk-adjusted basis. The strength of the 60/40 portfolio in these periods lies in its ability to reduce equity volatility and benefit from bond price appreciation during equity downturns."
|
| Upside down |
| 09/21/24 | | Bonds |
"Well, look at that! As the Fed cut the short-term policy rate, yields in the portion of the yield that matter more rose."
|
| The calm before the storm |
| 06/29/24 | | Bonds |
"In our view, neither private credit nor direct lending have rewritten the rules of credit risk. We'd argue that what passes for innovation in finance is often just repackaging risk in more convenient and higher-fee wrappers"
|
| Comfort has a cost |
| 03/03/24 | | Bonds |
"In the financial markets, you'll typically pay a high price for certainty. That price is paid in lower investment returns, and sometimes also in greater financial hassles. Yet I see investors paying that price again and again."
|
| Yield is not return |
| 02/16/24 | | Bonds |
"Over the history of our internal bond dataset, returns for bonds rated single B have been 3% behind their yields, and returns for bonds rated CCC have been 7% behind their yields. We suspect that the average result for highly levered private credit deals will fall within that range."
|
| Ask what your credit quality pays |
| 01/28/24 | | Bonds |
"So rather than target a 7% yield, or any other yield, perhaps the right question is: "What's the best I can do in the liquid credit market?" The yield on the BB index is a good approximation. Right now, the BB index yields 6.6%. Meanwhile, the single B index yields 7.8% and the high-yield index yields 7.9%. Those are juicy 7% yields, but they are also less likely to be realized."
|
| Today's yield curve steepening |
| 11/26/23 | | Bonds |
"However, today's steepening results from the opposite conditions. 10yUST yields are rising relative to 3mUSTs'. While the investment spread first appears to be increasing (positive), the impact on existing investments can be detrimental. Falling bond prices (produced by higher yields) could affect other assets and lower their returns. As a result, carry trade profits can compress leading to a reduction in borrowing capacity, unwinding of leverage, forced selling of assets, and lower prices. In this framework, rising interest rates can destabilize financial markets, creating less favorable investment conditions."
|
| Consider a bond allocation |
| 11/12/23 | | Bonds |
"Looking ahead, we believe investors should consider the value longer-duration bonds may offer in a future environment marked by federal funds rate cuts beyond what the market has currently priced in. While cash offers limited upside, as previous results indicate, the Aggregate Index could generate an intermediate-term total return in excess of today's yield."
|
| Where are all the defaults |
| 10/19/23 | | Bonds |
"Even if we recast the historical high-yield spread as if today's rating distribution were true throughout the spread's history, it does not change the historical behavior of the high-yield spread much."
|
| The worst bond bear |
| 10/13/23 | | Bonds |
"the crash in long-term bonds is now roughly the same magnitude as the crashes in the stock market during the dot-com bust and the Great Financial Crisis"
|
| If you're not confused, you're not paying attention |
| 10/07/23 | | Bonds |
"bond markets act as if they think inflation can be extrapolated. Long-term interest rates tend to be high when the last decade's inflation was high. US long-term bond yields, such as the ten-year Treasury yield, are highly positively correlated (70% since 1913) with the previous ten years' inflation. But the correlation between the Treasury yield and the inflation rate over the next ten years is only 28%."
|
| Long and short of it |
| 09/24/23 | | Bonds |
"I would lean heavily on short-term bonds. Since interest rates are unpredictable, I see that as the best route to preserving value."
|
| Two per cent real yields |
| 09/24/23 | | Bonds |
"The good news for investors is that the highest yields in ~15 years, either real or nominal, can be locked in with a buy-and-hold strategy. No one knows if current rates are at or near a peak, but this much is clear: the case for a relatively higher allocation to Treasuries vs. recent history hasn.t looked this compelling since George W. Bush was walking the floor in the Oval Office."
|
| The smart debt money |
| 07/09/23 | | Bonds |
"Single B credit has lower returns than BB credit. Our long-standing opinion is that the incremental yield available from lower-rated credit is erased by higher default and down-grade losses. Perhaps the greatest innovation of private credit is that it is not rated. We suspect that if we could get aggregate credit stats for private credit, investors would be concerned by what they found."
|
| Mortgage rate update |
| 04/08/23 | | Bonds |
"With the ten-year yield at 3.3%, and based on an historical relationship, 30-year rates would currently be around 5.0%. So, mortgage rates are higher than expected based on the ten-year yield"
|
| Trading a 2s10s inversion |
| 01/08/23 | | Bonds |
"We have discussed why the yield curve inversion is important to investors while showing that such an event, despite not offering an immediate boon for bond investors, does support both intermediate and long-term forward return outperformance. Further, we have also demonstrated that bond price returns following the peak of a yield curve inversion tend to produce above average forward-looking returns across all time horizons."
|
| Farewell, TINA |
| 10/02/22 | | Bonds |
"but for the first time in several years, bonds are attractive investment options. In addition to providing diversification versus equities, and some ballast to an allocation, you now get paid for owning them."
|
| Losing with bonds |
| 10/01/22 | | Bonds |
"bonds generated a negative return in the 40 years from 1940 to 1980, which includes various market and economic cycles, including World Word II. Holdings bonds in that period would have consistently reduced the purchasing power of such a portfolio, leaving investors poorer."
|
| Mayday from bonds |
| 05/08/22 | | Bonds |
"Year-to-date, long maturity Treasuries have declined in price by almost 20%. Because of their high interest rate duration, long maturity Treasuries have underperformed both investment grade bonds and high yield bonds."
|
| Fed's plan to raise interest rates is wrong |
| 03/21/22 | | Bonds |
"The central principle of anti-inflationary monetary policy is that to reduce inflation it is necessary to raise real rates. Equivalently, it is necessary to raise interest rates by more than the inflation being counteracted and above a neutral level that neither speeds nor slows growth."
|
| AAA for Apple |
| 01/30/22 | | Bonds |
"The triple-A rating typically bestows the lowest borrowing rates and suggests the highest ability to repay bondholders. But the triple-A club has been shrinking over the past four decades. Apple recently became only the third current corporate member of this exclusive club."
|
| How to worry about duration |
| 01/30/22 | | Bonds |
"Rising rates translated to negative returns across the interest rate curve, with bond returns at longer maturities suffering more."
|
| Economists bad at forecasting |
| 10/30/21 | | Bonds |
"I was looking at survey based forecast errors for short term interest rates, when I generated this graph. It's certainly a humbling picture."
|
| Evaluating credit risk |
| 08/29/21 | | Bonds |
"I turned to my favorite measure of credit risk to try to answer this: (Long-term Debt + Short-term Debt) / Market Capitalization. Unless a company is in a very stable industry, I like that figure to be under one."
|
| A pragmatic approach to Treasurys |
| 07/04/21 | | Bonds |
"But you should be a Treasury pragmatist. They serve a valuable role in the portfolio, especially in an active portfolio that increases or reduces risk based on the economic cycle. There is no other asset that we can think of that provides portfolio insurance and pays a positive coupon. If I tried to sell you an asset that was likely to trade up during recessions and yet pay you to own it, you'd be trying to figure out how the con worked. But that is how Treasurys act."
|
| A dark age for bonds |
| 05/23/21 | | Bonds |
"There have been many periods in which real yields have been significantly higher or lower than the historical median. This includes times during which real yields have been negative (16% of the time) and other times when real yield have been above 4% (17% of the time)."
|
| Ain't so bad |
| 03/21/21 | | Bonds |
"The 20-year treasury went from a low of 0.87% in March to 2.3% today. This is good for people buying today, relatively speaking, and horrible for people who bought in March. If rates stay where they are, it will take nearly 6 years to get back to break even."
|
| Beyond yield |
| 12/05/20 | | Bonds |
"Credit ratings are to fixed income what valuation multiples are to equities. Most credit analysts focus on yield and duration while most equity analysts focus on growth and discount rates, but in our view, the true drivers of return are changes in rating for bonds and changes in multiple for equities."
|
| Game over |
| 10/11/20 | | Bonds |
"I'd stop thinking of bonds as a source of yield or as a diversifier for stocks. Instead, think of them as way to generate cash if the stock market is in the toilet."
|
| Financial leverage risk |
| 10/03/20 | | Bonds |
"The leverage of US stocks has been increasing over the last four decades. The most leveraged stocks did not generate higher returns than the least leverages ones. However, they were also not riskier."
|
| Stealthy government debt liquidation |
| 10/03/20 | | Bonds |
"Debt is not necessarily a bad thing: it might help governments smooth consumption, finance projects that require lumpy initial cash outflows, or help supplement demand gaps during recessions/depressions, etc. However, overwhelming debt is an issue because you can run into financial distress and bankruptcy predicaments. Governments eventually realize they are going bankrupt and devise schemes and methods to liquidate the government debt."
|
| Government bonds are duds |
| 09/11/20 | | Bonds |
"But while the income side of the equation for bonds was clearly not what it once was, until very recently we have continued to assume that bonds could accomplish their other important task, providing capital gains in the event of an economic disaster. This winter, U.S. Treasuries once again did their hedging job admirably, providing substantial positive returns when riskier assets fell in the early stages of the Covid-19 crisis. But that success has come at a cost. At today's yields, U.S. Treasuries not only fail to provide a useful amount of yield to investors but also have likely lost their ability to hedge in the event of further economic trouble."
|
| Moar Income |
| 08/16/20 | | Bonds |
"You basically need to step out on the risk curve and start taking some stock market like risk or longer duration bond risk if you want some income. The worst part is, if inflation ticks higher the Fed has made it clear they won't raise rates any time soon. So you could get a form of yield curve control here where inflation is rising, demand for government debt is declining and the Fed insists on keeping rates low. Navigating the future of the bond market has probably never been harder than it is today."
|
| Surge in defaults |
| 07/26/20 | | Bonds |
"More than half of companies that defaulted in the second quarter are owned by private equity firms, Moody's said in a report this week."
|
| The twilight of bonds |
| 06/26/20 | | Bonds |
"But with low, nil, or negative yields, how much can bonds still contribute to a portfolio? Has the QE Kryptonite permanently disabled their superhero powers?"
|
| The Bond Offer You Can Refuse |
| 04/12/20 | | Bonds |
"People say that cash has an opportunity cost. But that opportunity cost is a function of what comparable investments can earn. Rarely has cash (without rate risk) had this low of an opportunity cost compared to Treasury bonds (with rate risk)."
|
| Federal Reserve cuts rates on Sunday |
| 03/15/20 | | Bonds |
"The effects of the coronavirus will weigh on economic activity in the near term and pose risks to the economic outlook. In light of these developments, the Committee decided to lower the target range for the federal funds rate to 0 to 1/4 percent."
|
| Investors are hooked |
| 02/01/20 | | Bonds |
"If high-yield bonds were the OxyContin of private equity's debt binge, private credit is its fentanyl."
|
| Bonds, bubbles, and biases |
| 01/24/20 | | Bonds |
"The single best predictor of future bond returns is their starting yield. The lower the starting yield, the lower the future returns."
|
| Beating the index in bonds |
| 09/10/19 | | Bonds |
"Why do investment-grade bond managers seem to consistently beat the index, and why do high-yield managers so consistently fail? And what lessons should investors take away from this data about how to win in bonds?"
|
| Bonds are expensive |
| 09/06/19 | | Bonds |
"Furthermore, the U.S. bond yield might be record low on our combo value/carry metric, but it's still high versus some major parts of the world attempting to discover how negative a government guaranteed bond can yield before savers build private fortresses to store cash."
|
| LBOs go bankrupt more often |
| 08/12/19 | | Bonds |
"Healthy companies acquired by private equity firms through leveraged buyouts see their probability of defaulting on loans increase ten-fold, new research shows."
|
| Sovereign bonds since Waterloo |
| 02/12/19 | | Bonds |
"This paper studies external sovereign bonds as an asset class. We compile a new database of 220,000 monthly prices of foreign-currency government bonds traded in London and New York between 1815 (the Battle of Waterloo) and 2016, covering 91 countries. Our main insight is that, as in equity markets, the returns on external sovereign bonds have been sufficiently high to compensate for risk. Real ex-post returns averaged 7% annually across two centuries, including default episodes, major wars, and global crises. This represents an excess return of around 4% above US or UK government bonds, which is comparable to stocks and outperforms corporate bonds. The observed returns are hard to reconcile with canonical theoretical models and with the degree of credit risk in this market, as measured by historical default and recovery rates. Based on our archive of more than 300 sovereign debt restructurings since 1815, we show that full repudiation is rare; the median haircut is below 50%."
|
| A bad bond idea |
| 01/22/19 | | Bonds |
"The Agenda assesses the value of social impact bonds - a tool used by some governments to raise private capital to pay for social services." [video]
|
| Canada's most boring investment ever |
| 05/14/18 | | Bonds |
"Enter the good old GIC. Not only does the Canada Deposit Insurance Corporation (CDIC) insure GICs within specified limits, many GICs have yields that rival those of your favourite bond ETFs, with a much lower average maturity. In fact, a 1.5 year GIC ladder at RBC Direct Investing currently boasts an identical average yield of 2.34%, with an average maturity of just 3 years"
|
| A 367-year-old water bond |
| 07/09/17 | | Bonds |
"A 1648 Dutch water bond housed at Yale's Beinecke Rare Book & Manuscript Library is unique among the tens of thousands of manuscripts that reside there. While most of the Beinecke's archival holdings are by their nature dead - their original purpose being fulfilled - the water bond lives on. It still pays annual interest more than 367 years after it was issued."
|
| High yield becomes low yield |
| 06/04/17 | | Bonds |
"Fast forward to today and we have reached the opposite extreme, with European junk bonds at an all-time low yield of 2.67%."
|
| Be wary of junk bonds |
| 01/15/17 | | Bonds |
"Junk bonds have defaulted historically at an average rate of 4.2% a year, according to data from Standard & Poor's. That is more than the current spread, meaning the extra yield investors hope to capture by owning junk could easily evaporate. Investors tend to forget this, especially during periods of low defaults. Defaults don't always wipe out investors - typically they will recover 40% (of the par value of the bond) from a default. Still, when one accounts for both defaults and recoveries, the loss rate on junk bonds has averaged about 2.5% a year."
|
| What 2 years of negative rates tell us |
| 08/21/16 | | Bonds |
"It hasn't worked very well. As many experts predicted at the time, the policy has had only a modest impact on growth. It is also increasingly clear that pushing rates down further wouldn't help much and could, in fact, increase risks to the global financial system."
|
| Do the hard thing |
| 07/24/16 | | Bonds |
"The reach for yield is becoming a reckless lunge. While high-quality bonds still have their place, too many investors are buying high-risk bonds instead."
|
| Bonds aren't wretched |
| 07/17/16 | | Bonds |
"Why do so many bond investors feel nostalgic for the days when yields were negative (after inflation)?"
|
| Bond challenge |
| 04/30/16 | | Bonds |
"The challenges of investing in a negative interest rate world. Guggenheim Partners Scott Minerd discusses strategy for his firm and its top-rated bond funds." [video]
|
| The wrong kind of savings |
| 04/24/16 | | Bonds |
"Negative interest rates are surely a sign that something is wrong with an economy. Normally, people have to be rewarded if they are to be induced to postpone consumption. Penalising them for doing so seems perverse."
|
| Bond returns imperilled |
| 03/19/16 | | Bonds |
"As bond yields have relentlessly fallen towards - and even beyond - zero over the past few years, investor returns are very vulnerable to small movements in prices and yields."
|
| Bizarro world of negative interest |
| 03/06/16 | | Bonds |
"Negative interest is hard to even think about. Our whole financial system is built the other way, on positive interest rates. This is mind-boggling."
|
| Yield in a low yield world |
| 02/14/16 | | Bonds |
"Much like value investing in stocks, one can apply a value methodology to global bonds."
|
| Ignore the Fed |
| 07/30/15 | | Bonds |
"Instead of hanging on every Fed utterance, let me suggest you take a different approach. Take one phrase from the Fed as your mantra: data-dependent."
|
| Crisis in Illinois |
| 05/27/15 | | Bonds |
"Illinois has one of the worst-funded pension systems in the nation. Chicago also has a pension crisis, leading Moody's Investors Service to downgrade its credit rating to junk status on May 12, potentially threatening the city's ability to borrow. And the state faces an expected budget deficit of $6 billion, which it needs to address quickly. With just days before a legislative deadline, the new Republican governor, who ran on cutting costs and holding down taxes, is at odds with Democrats who hold a veto-proof supermajority in the legislature."
|
| Nestle is getting paid to borrow money |
| 02/14/15 | | Bonds |
"Once upon a time, you actually had to pay lenders to borrow money. It was an archaic ritual called 'interest'"
|
| High yield market is out of control |
| 01/20/13 | | Bonds |
"I find it interesting: Many many people realize the market is heavily overvalued in terms of compensation of return versus risk, but they still are buying."
|
| Howard Marks on Bonds |
| 01/12/13 | | Bonds |
"These are unhappy times for bond investors according to Howard Marks."
|
| Garbage for brains? |
| 11/17/12 | | Bonds |
"Corporate bonds, still carrying all the idiosyncratic risks of single companies, are priced as if they were safer than Treasurys."
|
| Last refuge of scoundrels |
| 11/03/12 | | Bonds |
"Governments involved in financial repression (keeping savings rates below the inflation rate) encourage their citizens to do stupid things by reaching for yield. Remember, most people think of yield as a magic chicken that lays eggs on schedule, and never gets sick or dies. Those who truly understand markets know that yield is an allocation of free cash flow, and that many businesses can.t control their free cash flow, so dividends are less than fully certain."
|
| One for the ages |
| 11/03/12 | | Bonds |
"The next bankruptcy cycle, whether in 2 or 3 or 4 years, is going to be one for the ages."
|
| All time low yields |
| 09/11/12 | | Bonds |
"According to both the Barclays high-yield index and the CS HY index, yields in high yield have reached an all time low of 6.6%. Further, over the last few weeks, traders and syndicate desks have been whispering of a simply gargantuan amount of high yield and leveraged loans coming this month. Certain desks have been advocating a move to CCC assets as they still yield approximately 100 bps over their all time low seen on...wait for it...May 2007."
|
| We live in remarkable times |
| 09/08/12 | | Bonds |
"As Deutsche Bank points out in its long-term asset return study, the longest series of bond yield data is for the Netherlands dating back all the way to 1517. In June, those yields reached a record low. Not just any old record, then, but a 500-year nadir. In America, yields go back only to 1790 but they too have been at all-time lows. The Bank of England was founded in 1694 but never felt the need to push base rates down so low; not in two world wars or a Great Depression. Nor did the Bank ever feel the need to expand its balance sheet to such a great extent (although Deutsche only has data back to 1830); currently it is around 25% of GDP."
|
| The allure of long-term treasuries |
| 06/18/12 | | Bonds |
"Financial advisers continue to profess that US treasuries should be a large part of a balanced portfolio. With the 10-year treasury yielding around 1.6%, the advice is hardly based on return expectations. It is also not due to expectations of mark to market gains. The up-side case in being long the 10-year treasury would be if the rate were to drop to the level of Japan's - just over half (a fairly unlikely outcome). The mark to market gain would be 7.5%. The downside case on the other hand would be if the 10-year yield rose to what it was just a year ago (or higher) - say around 3%. The mark to market loss would be around 11.5%. So the instrument effectively has an asymmetric payout profile and terrible current yield. What gives?"
|
| Cutting back on bonds |
| 04/28/12 | | Bonds |
"The strongest consensus I could find relates to interest rates. There are few managers who aren't running light on bonds and/or keeping their maturities short (including holding cash) to protect against rising rates. Carl Hoyt at Seymour Investment Management used Warren Buffett's words to make the point. "Current rates ... do not come close to offsetting the purchasing-power risk that investors assume. Right now bonds should come with a warning label.""
|
| The constancy of safe asset demand |
| 01/23/12 | | Bonds |
"The findings are preliminary, but the authors calculate that the safe asset share - the percentage of safe assets to total assets in the US economy - has been roughly the same since 1952, at about 33 per cent."
|
| The rally that wouldn't die |
| 01/17/12 | | Bonds |
"Last year's surge came in the 30th year of a historic rally. Since 1981, long-term Treasury bonds have returned 11.03% annually, 0.05 percentage point better than the Standard and Poor's 500-stock index."
|
| What zero bound? |
| 01/13/12 | | Bonds |
"Negative interest rates are a big puzzle. Easy stories miss the point: 'flight to quality,' 'need for collateral,' etc. Those stories don't explain why bonds are worth more than money."
|
| No money for sauerkraut |
| 11/23/11 | | Bonds |
"Germany failed to get bids for 35 percent of the 10-year bonds offered for sale today, propelling borrowing costs in Europe higher and the euro lower on concern the region's debt crisis is driving away investors."
|
| The difference between AAA and AA+ |
| 08/08/11 | | Bonds |
"We simply don't have enough AAA and AA rated data to be statistically confident in these distinctions ex ante, which is why AA+ and AAA rated securities differ very little in their yields, usually by only 10 basis points (0.1%) on average. Here's the data from Moody's, that excludes Munis and ABS"
|
| S&P cuts U.S. rating |
| 08/06/11 | | Bonds |
"The U.S. had its AAA credit rating downgraded for the first time by Standard and Poor's, which slammed the nation's political process and said lawmakers failed to cut spending enough to reduce record deficits."
|
| Negative nominal interest rates |
| 08/04/11 | | Bonds |
"Bank of New York Mellon Corp. on Thursday took the extraordinary step of telling large clients it will charge them to hold cash."
|
| AAA rating is a rarity |
| 08/03/11 | | Bonds |
"But the truth is, even as the government maintained its AAA grade, the markets suggested long ago that the United States was no longer deserving of such a high rating. The credit-default swap market provided one clue. During the financial crisis in early 2009, the price of insurance that would pay off if the United States government defaulted on its debt was similar to that offered for companies ranked just above junk. Even today, the price of insurance on a government default has been higher than that for Colgate Palmolive, the global toothpaste giant, which has a rating two notches below AAA."
|
| The AAA bubble |
| 07/16/11 | | Bonds |
"The AAA bubble re-inflates and suddenly sovereign debt becomes the major force driving the world's triple-A supply. The turmoil of 2008 shunted some investors from ABS into safer sovereign debt, it's true. But you also had a plethora of incoming bank regulation to purposefully herd investors towards holding more government bonds, plus a glut of central bank liquidity facilities accepting government IOUs as collateral. Where ABS dissipated, sovereign debt stood in to fill the gap. And more. It's one reason why the sovereign crisis is well and truly painful."
|
| Only millionaires should invest in bonds |
| 07/06/11 | | Bonds |
"A Bond ETF will have a management expense ratio of 25-35bp. The bid-offer spread on seven year bonds purchased in amount of $5,000 will almost certainly exceed this. Additionally, there will be costs associated with further trading, unless you spend amounts exactly equal to your coupon income."
|
| Inevitability of a Default in Greece |
| 05/06/11 | | Bonds |
"Sooner or later there will be a Greek default, even if it is officially described as a "voluntary restructuring" approved by most bondholders. Europe wants to delay that at least until 2013, when new rules are supposed to kick in that would let official creditors - such as Europe's bailout fund - do better in a deal than private creditors. But it seems less and less likely that the inevitable can be delayed that long."
|
| Negative Outlook on U.S. AAA Rating |
| 04/18/11 | | Bonds |
"Standard and Poor's put a "negative" outlook on the U.S. AAA credit rating, citing rising budget deficits and debt."
|
| Trouble Lurks in Junk Bonds |
| 03/21/11 | | Bonds |
"Risky bonds have been on a tear since 2009. But as the events in Japan and elsewhere fuel demand for safer assets, investors would be wise to exercise caution."
|
| The Bond Bubble |
| 10/03/10 | | Bonds |
"If anybody is to blame for a bond bubble, it isn't Joe Schmo it's Uncle Sam, with some help from overseas.'The Fed has effectively been taxing money-market funds by cutting short-term interest rates to recapitalize the financial system and to make things easier on borrowers,' says Dan Dektar, chief investment officer at Smith Breeden Associates."
|
| The muni-bond debt bomb |
| 07/26/10 | | Bonds |
"Like homeowners before the housing bubble burst, states and cities have gorged on debt, extended repayment times, and used devious means to avoid limits on borrowing - all in order to finance risky projects and kick fiscal problems down the road. Though the country's economic troubles have helped expose some of these unwise practices, the downturn has brought not reform but yet more abuse. Even as Tea Party protesters and taxpayer groups revolt against excessive government spending and taxes, they are paying too little attention to the gigantic state and local debt bomb. If it can't be defused, we're all at risk."
|
| Bond default |
| 07/21/10 | | Bonds |
"When Arkansas defaulted on its bonds in 1933, the politicians and investors talked about the same things we would talk about today. The state blamed underwriters for allowing it to sell too many bonds. Investors compared the willingness to repay debt with the ability to pay, and weighed the advantages of bonds backed by a pledge of taxing powers to those secured by specific revenue. Unlike today, nobody thought the federal government should come to the rescue."
|
| The bond return puzzle |
| 05/11/10 | | Bonds |
"High Yield bonds highlight the most fundamental problem in finance: that risk is not positively related to expected returns, and this fact is not empirically obvious. This strikes at the heart of finance, because 'risk' is a rationalization for many things, but after 50 years, remains like dark matter, a convenient assumption for an empirical 'anomaly'."
|
| Obama pays more than Buffett |
| 03/22/10 | | Bonds |
"Berkshire Hathaway's 1.4 percent notes due February 2012 yielded 0.89 percent on March 18, 3.5 basis points, or 0.035 percentage point, less than Treasuries, composite prices compiled by Bloomberg show. The Omaha, Nebraska-based company, which is rated Aa2 by Moody's and AA+ by S&P, has about $157 billion of cash and equivalents and about $52 billion of debt. P&G, the world's largest consumer-products maker, saw the yield on its 1.375 percent notes due August 2012 fall to 1.12 percent on March 18, 6 basis points below government debt. The Cincinnati-based company, rated Aa3 by Moody's and AA- by S&P, makes everything from Tide detergent to Swiffer dusters."
|
| Bondholders extract revenge |
| 11/06/09 | | Bonds |
"Companies in dire straits often roll the dice in a bid to stave off bankruptcy. The problem is that last-ditch efforts to raise new funds or restructure often come at the expense of bondholders."
|
| Yield hogs out-stampede stock bulls |
| 10/16/09 | | Bonds |
"In 1993, there was a headlong rush into bond funds as investors fled what then was unimaginably low money-market rates of 3%. In 1994, they learned an expensive lesson in bond-market math: when yields go up, prices go down. When the Federal Reserve hiked short-term rates that year, there was a frightful bear market, which featured the first rout in exotic mortgage-backed securities."
|
| Arithmetic returns for junk biased |
| 09/03/09 | | Bonds |
"junk bonds have not outperformed investment grade bonds since data on junk bonds really became available, around 1987. This is the real corporate bond puzzle, in direct contrast to the corporate bond puzzle most acaddemics address, which is the anomalously high return premium between BBB and AAA bonds (around 100 basis points annually)."
|
| Don't count on TIPS |
| 06/17/09 | | Bonds |
"TIPS protect you from inflation with one hand, but they punish you with interest-rate hikes with the other."
|
| Swensen recommends TIPS |
| 05/25/09 | | Bonds |
"David Swensen, the top-ranked college endowment manager in the past decade, said individual investors should own inflation-protected Treasuries because U.S. economic recovery efforts may lead to an increase in consumer prices."
|
| A great year in just five months |
| 05/25/09 | | Bonds |
"The market for risky high-yield, or junk, bonds has gone from ridiculously cheap to just cheap with remarkable speed. The Merrill Lynch U.S. High Yield Master II index has narrowed from a wide yield margin of 2,100-plus basis points over Treasuries with comparable maturities in February to 1,232 basis points through Thursday. Back in June 2007, the yield margin was a mere 241 basis points. (A basis point is one-hundredth of a percentage point.)"
|
| Zombie loans give life |
| 05/11/09 | | Bonds |
"Citigroup Inc. and Bank of America Corp. are also amending revolving loans to zombie borrowers on the brink of default and others with debt ratings that are among the worst. Lenders are betting the economy will improve enough to keep companies from adding to the $1.4 trillion of writedowns and losses by the world's largest financial institutions since the start of 2007."
|
| GM bondholder says offer isn't reasonable |
| 04/27/09 | | Bonds |
| The rise of the "empty creditor" |
| 04/22/09 | | Bonds |
| Move over, subprime |
| 02/07/09 | | Bonds |
| Worldwide Weimar |
| 02/01/09 | | Bonds |
| Cost of borrowing zooms up |
| 01/19/09 | | Bonds |
| BOE cuts rate to lowest since 1694 |
| 01/08/09 | | Bonds |
| Yielding to none |
| 01/08/09 | | Bonds |
| Muni-bond funds face record losses |
| 12/13/08 | | Bonds |
| The case for bonds |
| 12/13/08 | | Bonds |
| Want to lend money to Uncle Sam? |
| 12/09/08 | | Bonds |
| High yield credit spreads out of control |
| 12/04/08 | | Bonds |
| The Treasury once again can borrow for free |
| 11/21/08 | | Bonds |
| Treasury yields drop to record lows |
| 11/20/08 | | Bonds |
| The new order |
| 11/20/08 | | Bonds |
| Junk-bond yields bode ill for stocks |
| 10/22/08 | | Bonds |
| Is junk a bargain? |
| 10/06/08 | | Bonds |
| Corporate bonds worse than equities |
| 09/29/08 | | Bonds |
| Lehman's '100% principal protection' means pennies |
| 09/29/08 | | Bonds |
| Bye bye AAA |
| 04/07/08 | | Bonds |
| Student lenders stifled |
| 04/04/08 | | Bonds |
| Moody's, S&P defer cuts on AAA subprime |
| 03/11/08 | | Bonds |
| Foreclosures hit a snag for lenders |
| 11/15/07 | | Bonds |
| ABCP hits main street |
| 11/07/07 | | Bonds |
| Junk mortgages under the microscope |
| 10/18/07 | | Bonds |
| Profiting from mortality |
| 07/24/07 | | Bonds |
| Bear's big loss arouses SEC interest |
| 06/25/07 | | Bonds |
| Bear Stearns' hunt for big cash |
| 06/14/07 | | Bonds |
| Why subprime lenders are in trouble |
| 03/02/07 | | Bonds |
| Debt-market bomb could hurt us all |
| 02/23/07 | | Bonds |
| Repo men |
| 11/04/06 | | Bonds |
| Death of the bond salesmen |
| 10/25/06 | | Bonds |
| Yield curve inversion |
| 12/28/05 | | Bonds |
| Riding the yield curve |
| 12/28/05 | | Bonds |
| A hole in the middle |
| 10/20/05 | | Bonds |
| Canada Savings Bonds buyers are selling themselves short |
| 10/16/05 | | Bonds |
| Soft and flat? Danger! |
| 06/06/05 | | Bonds |
| Stalling again |
| 03/20/05 | | Bonds |
| Down at the dog pound |
| 11/11/04 | | Bonds |
| Global bond default rate rises slightly |
| 11/08/04 | | Bonds |
| Global credit quality getting better |
| 07/09/04 | | Bonds |
| Bonds vs. psychics |
| 05/30/04 | | Bonds |
| Perpetual debt |
| 01/27/04 | | Bonds |
| Repudiating the national debt |
| 01/16/04 | | Bonds |
| The invention of inflation-indexed bonds |
| 11/25/03 | | Bonds |
| In the long run we are all broke |
| 11/22/03 | | Bonds |
| Bonds' thrills and spills |
| 08/17/03 | | Bonds |
| Short memories, deep pockets |
| 06/15/03 | | Bonds |
| You still need bonds, but they've had a good run |
| 06/08/03 | | Bonds |
| US states face long-term budget shortfalls |
| 05/29/03 | | Bonds |
| WorldCom's bankrupt argument |
| 05/05/03 | | Bonds |
| The 'safe investments' that backfired |
| 04/21/03 | | Bonds |
| New view says 'debt deflation' to delay recovery |
| 02/24/03 | | Bonds |
| Pension threat to blue chip credit ratings |
| 02/07/03 | | Bonds |
| Ontario Savings Bonds new variable rate |
| 12/17/02 | | Bonds |
| Doors now closing |
| 10/24/02 | | Bonds |
| Canada Savings Bonds on sale |
| 10/02/02 | | Bonds |
| Bill on Character |
| 07/13/02 | | Bonds |
| After the binge |
| 04/20/02 | | Bonds |
| Real return bonds for Canadian dummies |
| 12/18/01 | | Bonds |
| Income bonds face collapse |
| 09/30/01 | | Bonds |
