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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
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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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Interest Rates At 1% By September |
Forbes.com - Dec. 10, 2009 - by Matthew Craft
Barclays peers into the future and sees better times. Cue the Fed.
As far as forecasts for next year go, the one from Barclays looks unusually sunny. The bank's research team sees the U.S. economy expanding at 4% to 5% clip in the the first three months of 2010 and the unemployment rate dropping. What's left of the financial crisis – the ongoing fear of losing a job or of another financial collapse -- may finally fade away.
But even economic rebounds have their bad sides. At a press conference on Thursday to present Barclays' ( BCS - news - people ) outlook for the first quarter of next year, the bank's credit analysts said that if their scenario plays out, the Federal Reserve would lift interest rates from near-zero sooner than currently expected -- up to 1% before September. In anticipation of a rate hike, investors would likely pull money from gold and other commodities. Stocks and bonds would take a lesser hit.
"Investors need to think about what the world's going to look like when the Fed starts tightening," said Larry Kantor, Barclays Capital's head of research. "You'll probably get a period of selling off in response."
Money market rates, currently below 1% at most banks, would begin to climb. The legions of gold hoarders would see their precious metal drop from $1,130 to a range of $950 to $1,000 an ounce. The U.S. dollar would gain strength. Kantor pointed to how the greenback recently jumped after the government reported that the pace of layoffs had slowed in November. "The market reaction to these labor market reports are a microcosm of what we're talking about."
In normal times, higher interest rates should spell trouble for bond markets. But Barclays' expected 1% federal funds rate is still low by any standard. Borrowing will stay cheap while the economy and corporate profits grow. Ashish Shah, co-head of credit research, said corporate bonds can't turn in another 2009 performance, when high-yield debt returned 52%, but they should do well. Investors will flock to corporate credit because it offers a better yield than anything else.
Barclays estimates high-yield bonds will hand investors a 7% to 8% reward and investment-grade bonds will return next to nothing. The bank's researchers find a few appealing areas for buyers: financial firms, lower-rated investment grade companies, and taxable municipal debt, or Build America Bonds.
Bond buyers remain wary of anything tied to finance, such as banks, life insurance companies and real estate investment trusts, and all pay a higher yield on their bonds than industrial companies. In contrast to previous years, financial firms now sit on plenty of cash and are likely to issue less debt. Barclays' researchers cite Citigroup ( C - news - people ), which estimates it will raise $15 billion in fixed-rate debt, compared with $50 billion in 2009.
In their outlook for next year, Barclays' credit analysts declined to name any banks whose investment-grade bonds are worth buying. But they name favorites when picking trust preferreds, a type of hybrid security: Bank of America ( BAC - news - people ), JPMorgan Chase ( JPM - news - people ), Citigroup and Wells Fargo ( WFC - news - people ).
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Income Security Recommendation January 2013 Issue.
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