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| 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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Don't Count Bill Gross Out Just Yet |
Seeking Alpha - June 15, 2011 - by The Inflation Trader
This is why I am hesitant to fade Bill Gross (aside from the statistical likelihood of doing so successfully). Days like yesterday, in which bonds sell off 11bps (¾ point in the 10y futures contract) on essentially nothing more than the failure to appreciably bust through 3%, seem to me to be foreshadowing the day when the 11bps is just the start of something.
The catalyst couldn’t have been Retail Sales. Retail Sales was right on the estimates when the revisions to the prior month are included, and frankly this isn’t a data point that demands pinpoint accuracy since the misses can be quite large. Retail Sales ex-autos rose 0.3%, which was still the worst performance since last July. And yet the rains came in bonds.
Now, some people might be excited about the good news implied by the recent bounce in the Citi Economic Surprise index, which I mentioned here and which subsequently fell to -117.2, the lowest ever realized except for in the immediate aftermath of the Lehman crisis. The bounce to -95.4, however, is entirely a product of old data falling out of the 3-month window of the data (it’s not a smoothed average). In mid-March, bad surprises on Claims and on Michigan, as well as Trade, really started the downward surprises. In the next couple of days, a rotten Housing Starts figure will roll off. In short, it is going to be difficult for the index to not bounce a fair amount, especially since economists by now are surely compensating for the trajectory they now realize is in place.
Maybe bond guys just realize that if all of this bad news is in place, and not many folks are expecting a cheerful resolution from the Greek crisis, there are few reasons for Treasuries to rally further. I also wonder if it is time to be short TIPS. While inflation is going to continue to gradually accelerate (today’ CPI data is expected to bring the year-on-year core rate to 1.4%, reasonably close to the lower end of the 1.6%-1.8% range I expect it to inhabit at year-end), TIPS have benefitted more than Treasuries from a scarcity effect while the Fed was buying all of the net supply over the last six months at the same time that such a policy ignited a desire among investors to buy inflation protection. The 10y TIPS yield at 0.77% is very low, both on an outright basis and even as a proportion. Ten-year real yields are 25% of 10-year nominal yields; the more-normal proportion is 35-50% in non-crisis times. That suggests 10-year TIPS might be 30bps or more rich, only nine days away from a 30-year TIPS auction that will be held without the agreeable background of Fed buying.
To be sure, there are plenty of buyers of inflation protection and not much worth buying as all forms of direct protection are expensive. I first wrote about the exchange-traded inflation-linked bond issued by Sallie Mae, symbol OSM, in May 2010 when it was trading at 16 and priced to yield CPI+10%. Now it’s around 23, priced to yield CPI+4%, and that means it is approximately fair given the credit spread of Sallie Mae. I am entirely out of my position, because now the possible credit exposure in a period of tight spreads outweighs (for me) the marginally higher coupon. It’s fair relative to TIPS, that is, and TIPS are expensive so…
For the complete article.
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| Stuff to look at |
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S&P Commentary and Newsletters: S&P
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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