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Reuters: There's a Shortage of Bonds

Thu, 16 May 2013 09:28:45 +0000

At first, it seems unthinkable. With global government debt rising and corporations rushing to issue debt at low rates, could there really be a shortage of bonds? According to a story published by Reuters on May 15, that's exactly the case.

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The Highest Yielding Bond ETFs

Wed, 15 May 2013 16:44:55 +0000

It's getting harder to find investments with decent yields these days, but it isn't impossible. Below is the list of the 15 highest yielding bond ETFs, ranked in order of their SEC yields as of May 14, 2013, and excluding target maturity ETFs. The yields shown here may differ from others that appear on ETF-screening websites, since most sites use trailing 12-month yield - a different measure. Not surprisingly, the majority of the funds invest in high yield or emerging market corporate bonds. Keep in mind, of course, that there's more to selecting an investment than its yield, as outlined in my article The Top 10 Most Common Mistakes by Bond Investors. The 15 highest-yielding bond ETFs are:

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What Will Happen to Bonds When the Fed Raises Rates?

Tue, 14 May 2013 10:59:16 +0000

Nobody knows exactly when the Federal Reserve will raise interest rates, but one thing is certain: once investors sense that rate increases are in the offing, the 31-year bull market in bonds will come to a close.

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Comments from Bernanke and Bill Gross Pressure the Bond Market

Fri, 10 May 2013 15:58:20 +0000

Last Friday's better-than-expected jobs report continues to reverberate through the U.S. Treasury market. After closing with a yield of 1.63% on May 2- the lowest level since mid-December - the yield on the10-year Treasury note surged to 1.75% on the day of the report last Friday. (Keep in mind, prices and yields move in opposite directions.) The downturn continued this week, with the 10-year closing Friday at 1.90% - its highest close since March 26. The weakness in Treasuries has been felt across the market, as mortgage-backed securities, municipal bonds, and investment grade corporate bonds have all slipped so far in May.

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Warren Buffett: Bonds are a "Terrible Investment"� Right Now

Tue, 07 May 2013 10:08:16 +0000

In an interview on CNBC yesterday, legendary investor Warren Buffett weighed in with his opinion on whether he would own bonds right now. His answer: an unequivocal "no." Buffett said, "In terms of bonds, someday they will yield a whole lot more than they are yielding now." (Keep in mind, prices and yields move in opposite directions.) "I don't know when it will happen. It's going to happen." Buffett, a long-time stock investor who has become one of the richest people in the world by investing in stocks and buying entire companies, continues to like stocks because "they grow earnings and expand. I like owning stocks. I don't like owning bonds" since stocks are "productive assets."

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April 2013 and Year-to-Date Bond Market Returns

Sun, 05 May 2013 21:16:16 +0000

The financial markets have a way of confounding the consensus expectation, and that proved to be the case again during April. A weak first quarter for the bond market seemed to confirm the prevailing sentiment that bonds were due for a subpar year in 2013. Bond prices turned sharply higher in April, however, bringing the year-to-date returns of most sectors into positive territory.

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Strong Jobs Report Blasts the Treasury Market

Fri, 03 May 2013 11:25:59 +0000

The prices of U.S. Treasuries fell sharply on Friday, as investors reacted to an employment report showing that unemployment has fallen to 7.5% - its lowest level since December 2008. The April non-farm payroll report showed a gain of 165,000 jobs last month, and the March report was revised upward from 88,000 to 138,000. Treasury prices plunged on the news, driving yields up to 1.75% from the prior day's close of 1.63% - a huge move for the government bond market and the worst day since last September. (Keep in mind, prices and yields move in opposite directions.) Other rate-sensitive segments of the market fell in sympathy.

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Senior Loan Funds Seeing Explosive Growth

Thu, 02 May 2013 12:31:01 +0000

Senior loans are extremely popular right now, and fund companies have noticed. The largest ETF in the space, PowerShares Senior Loan Portfolio (NYSE:BKLN) has hauled in $2.27 billion in new cash so far this year - making it the eighth-most popular option among all U.S. ETFs in that time. The fund has returned 7.2% in the past 12 months.

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Vanguard Cuts Fees on Three Bond ETFs

Mon, 29 Apr 2013 19:37:16 +0000

When ETF providers compete on price, investors win. Vanguard is the latest company to reduce fees on its funds, cutting the expense ratio on its Short-Term Bond (NYSE:BSV), Intermediate-Term Bond (NYSE:BIV), and Long-Term Bond (NYSE:BLV) ETFs from 0.11% to 0.10% per year. The three funds were already among the most inexpensive in the bond ETF universe, and now they have become even more attractive for investors. And in this low-rate environment, every little bit counts.

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Treasuries Rally in the Spring for the Fourth Year in a Row

Mon, 29 Apr 2013 12:24:05 +0000

U.S. Treasuries have defied all expectations by staging a massive rally in recent weeks, delivering positive total returns and reaching their lowest yield levels since mid-December. But should investors really be surprised? The pattern that has been in place so far this year - an uptick in yields in January and February followed by a downtrend in the second quarter - has actually occurred in each of the past three years. (Keep in mind, prices and yields move in opposite directions.)

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