High-grade corporate bonds (LQD) have a fan in JPMorgan, which looks for further tightening in...

High-grade corporate bonds (LQD) have a fan in JPMorgan, which looks for further tightening in spreads given increasing demand from pension and insurance buyers as they turn away from high yield (HYG, JNK) and emerging-market debt (EMB). Another plus: Investment-grade corporate paper tends to have lower duration than, say, long-term Treasurys (TLT), of which the team is also bearish. JPMorgan's a big bank, and someone else there has a different opinion of corporates.

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    i will be forced out of my long treasury trade at some point (it is losing money right now...though not as bad as a lot of other things lately.) i still don't see the "next leg" of the recovery...the Fed caused a Taper tantrum and has now been forced to retreat...simply put the training wheels aren't ready to be taken off here "though we tried." there's a lot of good news of course (massive decline in the deficit, interest rates are in fact incredibly low already, the dollar hasn't collapsed as a consequence, commodities are now rolling over, the economy appears to still be growing) but outside of soaring equities none of these things are treasury negative. reducing what's on the Fed's balance sheet would appear to be a program that will take decades and need a massive surpluses. in the meantime "interest rate supression" will be the order of the day.
    15 Jul 2013, 03:26 PM Reply Like
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