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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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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
|
3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
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)
|
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 look set to beat stocks |
FINANCIAL POST - Sept. 22, 2011 - by David Pett
Credit spreads are expected to narrow after rising too excessively this summer, leaving corporate bonds well positioned to outperform equities in the weeks ahead, say a growing number of analysts.
Despite growing fears about the U.S. economy, markets are overestimating potential increases in default rates of corporations who have raised significant cash balances and have much healthier balance sheets than was the case during the past recession.
“Of course, if the financial crisis is any guide, the spread could yet become a lot wider. This would be most likely to happen if the U.S. slipped back into recession,” John Higgins, an economist at Capital Economics said in a note to clients Wednesday.
“However, our base case scenario is that the U.S. is more likely to experience a protracted period of sluggish economic growth, accompanied by exceptionally loose monetary policy. If we are right, then we would not be surprised to see corporate bond yields grind lower.”
U.S credit spreads have widened significantly since the end of July, but corporate bonds have still outperformed equities during this period.
The yield spread between 7-10 year U.S. BBB-rated corporate bonds and Treasuries has climbed from about 2% at the end of July to nearly 2.9%.
At this point, Pierre Lapointe, a macro strategist at Brockhouse Cooper in Montreal said credit spreads are at mildly recessionary levels.
In terms of lower-rated credit, he said U.S. high yield spreads are currently at levels seen during the 2001 recession or the early 1990s recession. Meanwhile, investment grade spreads are also at levels observed in the early 2000s recession.
“Credit risk premiums are not at levels seen during the doldrums of 2008, but they nevertheless signal clearly that credit markets are not enamoured with the state of the U.S. economy,” he said in a note this week.
While he believes Europe has probably already returned to recession, he thinks the U.S. will not contract again, but muddle through and grow at a slow pace.
From this perspective, he said the latest re-pricing in credit has made this asset class more attractive because companies have been busy deleveraging and are holding significant amounts of cash on their balance sheets.
“From a shareholder’s perspective, this is negative as cash is meant to be deployed to projects that create shareholder value,” Mr. Lapointe said.
“Yet from a creditor’s perspective, high levels of cash on a balance sheet are credit positive, as liquidity ensures that companies will make good on their debts.”
Despite concerns about European sovereign debt and the U.S. economic recovery, Moody’s Investor Services shows no sign of a spike in U.S. speculative-grade defaults over the next year.
For the complete article.
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