| 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)
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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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Market Opinion Fixed Income Bond Recovery |
Fixed Income: August 14Bond Recovery Six points shy of our 4.50% upside target, the yield on the US 10-year Treasury bond eased significantly as the market experienced a strong relief rally. This took the yield back below the key 4.28% level. Whilst we still feel that there are upside risks to Treasury yields, we are not ignoring the market at all. In fact, the yield could even compress further to the all-important 4.16% area, given current momentum, and especially if CPI data this week is in line with expectations. However, we would expect the 4.16-4.20% area to provide good support. US economic activity is still robust, and labour market conditions are improving, with potential for unit labour costs to rise. Ok, so the University of Michigan consumer confidence index declined to 92.7, from this year’s high of 96.50, and retail sales were weaker than expected in July at 1.8% m-o-m. That said, the latter is still a fairly positive number, and points to healthy consumer spending growth in Q305. As a result, we see no let up in the Fed’s tightening cycle, which should keep a certain amount of pressure on the long-end of the curve, albeit nothing like as much as economists would normally expect. Indeed, as we have been saying over recent weeks, despite our view of short rates rising and putting pressure on long rates, we do not envisage a meaningful, or prolonged, spike in the US 10-year yield, due to various fundamental factors at play. This week’s movement further highlights the point. The 10-year has had much inflationary news to contend with lately, and yet the yield never made it above 4.44%. At this level, investors were keen to return to the market on the slightest piece of non-inflationary data. Imagine their reaction once the US rate hikes and higher oil prices start to really hinder US growth. So whilst we still see further spikes higher as possible, beyond the short term, yields will remain low on an historical basis. Long-term inflation pressures are under control, and as we mentioned in our Foreign Exchange section, the longer the US tightening cycle continues, the more attractive US long yields become to an investor increasingly eager to lock in attractive, and sensible, rates of return. Moreover, we believe that wealth generation in emerging markets will lead to a greater appetite for US assets. This general support to the US bond market will greatly benefit emerging markets (EM). As we mention elsewhere, the fundamental outlook for emerging markets continues to improve, with debt profiles vastly superior than in anytime in recent history. This makes EM yields attractive on a medium-term basis, despite their record low levels over comparable US Treasuries. Russia, with its huge reservoir of foreign exchange reserves, making the government a net external creditor, is probably the pick of the EM bunch.
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| Partner Market Place |
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| Stuff to look at |
Yield and Income Newsletter: A must have for income investors. subscribe NOW
S&P Commentary and Newsletters: S&P
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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