| 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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| 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)
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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)
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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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Corporate Bonds Draw Enthusiasm Again |
THE WALL STREET JOURNAL - April 25, 2010 - By KELLIE GERESSY-NILSEN
NEW YORK—Crackerjack first-quarter earnings and encouraging economic statistics have helped corporate bonds climb back to precrisis levels, but some are wondering aloud whether investors are getting too exuberant again.
Some analysts and investors say markets aren't fully pricing in the added risks posed by Washington's overhaul of financial regulation and the Greek credit crisis. J.P. Morgan Chase told clients Friday that high-grade bonds had widened just 0.01 percentage point in the past week, and warned that the move suggests that the market "seems too complacent."
Patrick Freeland, chief executive at Carolina Capital Markets in Chapel Hill, N.C., agreed. "It is difficult to assess the risks on a proposed law that could change and a country whose main revenue is based on shipping and tourism," he said. "The industry has gotten too focused on speculating instead of giving sound investment advice and making sound investment decisions."
Investment-grade bonds have rallied over the past 13 months, and as prices have risen, yields have fallen. For one benchmark, the Bank of America Merrill Lynch Global Broad Market Corporate Index, the spread—the additional return that investors demand to own corporate debt instead of virtually risk-free Treasurys—has shrunk to 1.43 percentage points from 5.11 percentage points in March 2009.
High-grade bonds have posted total returns of 3.74% so far this year.
"Earnings are very strong, technicals are very good; that being said, the market seems to be ignoring the severity of the Greek situation as well as the ultimate impact of financial regulatory reform," said Tom Murphy, sector leader and portfolio manager at RiverSource Investments.
To be sure, the market has registered individual events as they happen: Goldman Sachs Group bonds, for example, fell after the Securities and Exchange Commission filed civil fraud charges against the bank lover its sales pitch for a derivative contract tied to subprime mortgages. And the price of insurance-like credit-default swaps tied to Greek sovereign debt rose as that government grappled to refinance its debt.
But those moves were isolated and quickly retreated. Overall, bond markets are about as bullish as they ever were. Lawrence Glazer, managing partner at Mayflower Advisors in Boston, said fund managers have been willing to bid up prices—and increase risk—in order to maintain performance with their respective peer group and benchmarks.
Martin Fridson of Fridson Investment Advisors in New York noted Friday that another benchmark, the Merrill Lynch High Yield Master II Index closed on Thursday at 99.435, up from an all-time low of 54.78 on Dec. 12, 2008. That is, even junk bonds are once again trading close to their full face value.
Mr. Fridson, however, said he thinks high-yield bonds are a safer bet at this point because the things investors are looking at—corporate earnings and economic growth—tend to help junk bonds more than investment-grade securities.
"High yield bonds have an 8.46% current yield and should benefit from spread contraction as the default rate continues to decline," he wrote in a commentary. "Even on the brink of par, the high yield asset class should handily outperform conventional fixed income categories over the next 12 months."
For bonds generally, however, others are less sanguine.
Suki Mann, credit strategist at Société Générale, said that despite a great start to earnings season, supportive economic data, a bull market in stocks, and all-in yields for corporate credit only a few hundredths of a percentage point off historic lows, the Greek drama will continue to threaten markets.
"Unfortunately, the market will dance to the tune of any emerging Greek-related news flow and is no mood to let up in its punishment of previous misdemeanors in the country," he said.
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