| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
|
425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Investors In For a Shock If Rising Rates Sink Bonds, Envision's Cohen Says |
Bloomberg - April 21, 2011 - By Christopher Palmeri
money manager.
Cohen lays out a grim scenario in “Surviving the Bond Bear Market” (John Wiley & Sons Inc., 224 pages, $39.95), co-written with husband Chris Malburg. Rates will surge if the global economy strengthens or because investors lose faith in governments with growing deficits, said Cohen, whose book came out this month. Standard & Poor’s this week put a “negative” outlook on U.S. credit, citing the risk that leaders will fail to curb debt.
“The baby boomers, who really have been all-in to all kinds of bonds and bond funds since the end of the credit crisis, they’ve never lived through a bear market with skin in the game,” Cohen said in a telephone interview. “It’ll freak people out.”
Fixed-income mutual funds took in net deposits of $645 billion from 2008 through 2010, according to the Washington- based Investment Company Institute. Cohen, who oversees $325 million as chief executive officer of Envision Capital Management Inc., said falling bond prices will lead to a wave of sales, much as the 2008 financial crisis triggered a 46 percent drop in the Standard & Poor’s 500 Index before the U.S. stock- market benchmark bottomed out in March 2009.
Cohen, 61, worked as an equity analyst at William O’Neil & Co. and as a bond broker at Cantor Fitzgerald & Co. before founding her firm, which manages fixed-income portfolios for individuals, 16 years ago. She writes a Forbes Magazine column and a newsletter on bond investing. This is her third book.
‘Bad to Terminal’
Cohen warned in November against California’s general obligation bonds because of the state’s deficits, saying, “The news headlines are going to continue to go from bad to terminal.” Since then, yields have risen to 4.44 percent from 4.09 percent.
Investors can guard against the steepest losses by switching to shorter-term funds, or profit through bearish Treasury bets, Cohen said. A 2 percentage point climb in interest rates over the next 12 months, which she said is possible, could spur price declines of 14 percent in 10-year U.S. Treasuries, according to data compiled by Bloomberg.
“Investors should keep a substantial amount of cash on hand during the nuclear winter to take advantage of the opportunities that inevitably occur,” said Cohen, whose book features a mushroom cloud on its cover.
Not everyone agrees with her thesis.
“Fear sells,” said Chris Ryon, who co-manages $6.5 billion in municipal bonds at Thornburg Investment Management in Santa Fe, New Mexico.
Muni Market Risk
The risk of municipal bankruptcies is overblown, he said. The average default rate for investment-grade municipal debt in the 10 years after issuance from 1970 through 2009 was 0.06 percent, according to Moody’s Investors Service.
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