| 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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Yield Curve Favors Short-Term Bonds as Fed, BOE Print Cash: Credit Markets |
Bloomberg - Oct. 21, 2010 - By Kate Haywood
Investors are favoring shorter- maturity corporate debt over longer-dated bonds by the most since credit markets froze, wagering central banks will succeed in sparking inflation.
The gap in relative yields on bonds issued by companies worldwide maturing in less than three years and debt due in seven to 10 years has widened to 47 basis points, or 0.47 percentage point, almost double the difference on June 30 and the widest since Sept. 19, 2008, according to Bank of America Merrill Lynch index data.
Rising speculation the Federal Reserve and the Bank of England will purchase bonds to inject cash into the U.S. and U.K. economies is triggering concern the cost of goods and services will rise. Investors are safeguarding more of their holdings in the shortest-dated notes because prices of the debt are less sensitive to inflation.
“We’re not sure when, but we do know that there will be a painful re-evaluation as a result of inflation and subsequent rate rises,” said James Lee, a fixed-income analyst at Calvert Asset Management in Bethesda, Maryland, with $14.7 billion in assets. “Investors are starting to position themselves for inflation with more shorter-dated and medium-term bonds.”
Bond traders’ inflation expectations in the U.S. for the next five years, measured by the breakeven rate between nominal and inflation-indexed bonds, rose to 1.46 percent from a one- year low of 1.13 percent on Aug. 24. The rate of inflation in the U.S., excluding food and energy costs, was 0.8 percent last month.
‘Flooding the System’
“You’ve got a massive amount of Treasury supply, you’re flooding the system globally with liquidity and a second quantitative easing that will put long-term inflationary pressure on the market,” said Greg Haendel, a money manager who helps oversee about $8 billion in fixed-income assets at Transamerica Investment Management in Los Angeles. “You’re definitely being paid to hold short-dated corporate bonds.”
Elsewhere in credit markets, the extra yield investors demand to own company bonds instead of similar maturity government debt rose 1 basis point to 169 basis points, down 12 basis points from Aug. 31, Bank of America Merrill Lynch’s Global Broad Market Corporate Index shows. Yields averaged 3.428 percent yesterday from 3.416 on Oct. 19.
UnitedHealth Group Inc. issued $750 million of debt in its first bond sale since February 2008, according to data compiled by Bloomberg.
Beating Estimates
The biggest U.S. health insurer by revenue sold $450 million of 10-year notes that yield 145 basis points more than similar-maturity Treasuries and $300 million of 30-year debt at a spread of 185 basis points. The Minnetonka, Minnesota-based company reported third-quarter earnings that beat analyst estimates on Oct. 19.
The cost of insuring bonds sold by Europe’s most indebted governments fell after a report signaled manufacturing in the region is growing faster than economists expected.
Credit-default swaps insuring Ireland’s government bonds fell 5 basis points to 413, contracts on Portugal’s debt dropped 6 basis points to 337, Italy decreased 2 basis points to 167 and Greece lost 2 basis points to 665, according to data provider CMA. The Markit iTraxx SovX Western Europe Index of default swaps on 15 governments was unchanged at 139.
Markit Economics’s manufacturing gauge rose to 54.1 from 53.7, exceeding analyst estimates for a drop to 53.2, according to the report today.
Bank of America
Notes from Bank of America Corp. were the most actively traded U.S. corporate securities by dealers yesterday with 180 trades of $1 million or more, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Credit-default swaps insuring the Charlotte, North Carolina-based bank’s securities climbed 1.5 basis points to 201.5, according to CMA. The contracts have jumped 18.9 basis points in the past two days as the Federal Reserve Bank of New York joined with the biggest U.S. bond investors in seeking to force the lender to buy back soured home loans packaged into securities.
Credit-default swaps typically fall as investor confidence improves and rise as it deteriorates. Contracts pay the buyer face value if a borrower fails to meet its obligations, less the value of the defaulted debt. A basis point equals $1,000 annually on a contract protecting $10 million of debt.
The Standard & Poor’s/LSTA US Leveraged Loan 100 Index dropped 0.03 cent to 91.03 cents on the dollar. The index, which tracks the 100 largest dollar-denominated first-lien leveraged loans, has fallen for three of the past four trading days after reaching 91.14 cents last week, the highest since May 13.
Emerging Markets
In emerging markets, Brazil plans to sell real-denominated bonds in the international market for the first time in three years after yields fell to a record low.
Latin America’s biggest country is joining Colombia, Chile and the Philippines in selling local currency debt abroad this year as record-low interest rates in the U.S., Europe and Japan fuel demand for higher-yielding securities.
Relative yields on emerging-market debt were unchanged at 262 basis points, according to JPMorgan Chase & Co. data. The index rose 18 basis points in the prior two days.
For the complete article visit Bloomberg.com
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