Fixed Income Trends: Credit Markets Largely Stabilized
11/30/2010 0 comments
Fixed income indices provide important insight into debt market conditions that are key to asset allocation strategies. MyPlanIQ tracks detailed weekly bond trend movement. We use ETFs that represent the bond classes.
Last week we noted that practically all bond assets other than high yield and treasuries had dropped dramatically. This week, we have seen some modest gains in short/medium maturity bonds and Munis. This indicates that terrifying state finances have produced an overdone sell off in municipal bonds.
|
Assets Class |
Symbols |
11/26 |
11/19 |
Direction |
|
High Yield |
JNK |
4.05% |
6.13% |
v |
|
Emerging Mkt Bonds |
PCY |
3.45% |
3.64% |
v |
|
Long Term Credit |
LQD |
2.5% |
2.55% |
v |
|
Intermediate Treasury |
IEF |
2.34% |
2.15% |
^ |
|
Intermediate Term Credit |
CIU |
2.16% |
2.1% |
^ |
|
Inflation Protected |
TIP |
2.05% |
1.96% |
^ |
|
MBS Bond |
MBB |
1.55% |
1.57% |
v |
|
10-20Year Treasury |
TLH |
1.46% |
1.18% |
^ |
|
International Inflation Protected |
WIP |
1.17% |
3.93% |
v |
|
US Total Bond |
BND |
1.05% |
1.04% |
^ |
|
Short Term Credit |
CSJ |
1.0% |
1.09% |
v |
|
Short Term Treasury |
SHY |
0.46% |
0.44% |
^ |
|
Treasury Bills |
SHV |
0.02% |
0.03% |
v |
|
International Treasury |
BWX |
-0.15% |
2.01% |
v |
|
20+ Year Treasury |
TLT |
-0.54% |
-1.29% |
^ |
|
New York Muni |
NYF |
-0.73% |
-2.31% |
^ |
|
National Muni |
MUB |
-1.1% |
-1.68% |
^ |
|
California Muni |
CMF |
-1.24% |
-2.86% |
^ |
Top Three Indicators
Click to enlarge
The spreads on speculative-grade bonds widened as investors still lacked confidence on whether Ireland’s fiscal crisis will be contained. At the same time in the U.S., data on jobless claims and manufacturing bolstered optimism the world’s biggest economy won’t slide back into recession, causing borrowers to default on the debt.
Factories in the Philadelphia region also expanded at the fastest pace of the year, and the number of workers seeking jobless benefits over the past four weeks fell to the lowest level in two years. The economic data appears to be in a strengthening mode and it is difficult to see a major sell-off of high yields gaining momentum.
Bottom Three Indicators
Click to enlarge
The Munis markets reversed their recent downward trend and have stabilized. One of the biggest worries for muni bond investors has been state and local budgets that have gotten out of hand all over the U.S. Although large-scale muni defaults are rare and they are usually resolved by investors getting late payments, there’s no ignoring the fact that states such as California and New York are in financial trouble and need to quickly find a way to balance their budget and get through the current period.
labels:investment,
Symbols:AGG,BND,BWX,CIU,CMF,CSJ,EMB,HYG,IEF,JNK,LQD,MBB,MUB,NYF,PCY,PHB,SHV,SHY,TIP,TLH,TLT,WIP,
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