| 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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Peak Theory in Government Bonds
Benchmark Yields in U.S., Germany, the U.K. and Japan Are Expected to Fall |
August 31, 2009, WSJ.com
Bond bears beware. Benchmark government-debt yields in the U.S., Germany, the U.K. and Japan may fall during the rest of the year.
These bond yields have held to relatively low levels in recent weeks despite a mix of improving economic data, from manufacturing to the housing sector, and a glut of supply.
Friday, the U.S. Treasury 10-year note yielded 3.453%, down from a peak of 4.012% in June. The German bund yielded 3.255%, the U.K. gilt 3.56%, and the Japanese bond 1.31%.
"We are going to see shallow growth at best in the year ahead, favoring government bonds again, as savers put cash into government bonds, risk-market profit-takers allocate assets to Treasurys, and inflation woes fade as job losses and credit concern linger," said George Goncalves, head of fixed-income rates strategy at Cantor Fitzgerald in New York.
One piece in the argument could come Friday, when the August payroll report is released. Economists expect it to show that U.S. employers cut 225,000 jobs, less than the loss of 247,000 jobs in July. Even so, the unemployment rate is predicted to rise to 9.5%, from 9.4%.
Stuart Thomson, a fund manager in Resolution Investment Management Ltd. in Glasgow, Scotland, said he remains bullish on major government-bond markets, even though they have underperformed riskier assets this year. The pace of global economic recovery likely isn't sustainable, he said.
Through Thursday, investors have lost 3.39% this year in Treasurys, compared to the gains of 40.65% on high-yield, high-risk corporate bonds and 4.15% on mortgage-backed securities, according to data from Barclays. Investors earned 1.26% in German bonds, 0.7% in U.K. bonds and 0.14% in Japanese bonds, in local currency terms.
A woman adjusts a promotional poster for Japanese government bonds in Tokyo, Japan, Aug. 20, 2009.
Bond bulls argue that many investors will cut risky asset holdings and move money to government bonds in coming months, because stocks have become less attractive in the wake of the powerful rally since March.
Steven Major, global head of fixed-income research at HSBC Holdings in London, also warned against the risk of a scenario like that of Japan in the 1990s: Despite aggressive fiscal and monetary stimulus, government-bond yields there continued to fall.
At the beginning of the 1990s, the Japanese 10-year government yield peaked around 8%. After the credit and housing bubble burst, the yield slumped below 2% by early 2000. It then plunged to 0.5% in 2003 even as policymakers ramped up fiscal stimulus, flooded the banking system with money and kept the interest rates at ultra-low levels for an extended period.
"We have to watch this Japan experience," Mr. Major said. "This is not a traditional cyclical economic recovery right now."
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