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Monday, November 26, 2012, 7:05 AM Fed involvement and investors' reflexive demand for safety are not just keeping a lid on Treasury yields, they've also brought volatility in the bond market to about the lowest on record. BAML's MOVE index recently fell to 53.70, nearing the 51.2 hit in May 2007. "Treasurys offer little real value, but in the short term, it is just hard to be a bear," says a fund manager, serving up a quote for a to-be-written book on the Bernanke-era bond market. Comment! [U.S. Economy]
Sunday, November 25, 2012, 8:05 PM "It's my worst nightmare," says a long-only bond fund manager. "There's nothing I can do - the checks come in every day, and I have to invest (the money)." Aging baby boomers following conventional wisdom by steering their accounts away from stocks and to fixed income at these low rates could get a very expensive lesson, writes Jonathan Trugman. (see also) 38 Comments [U.S. Economy]
Tuesday, November 20, 2012, 5:11 PM What is the risky asset, asks Jim Grant, scratching his head over the worldwide move into fixed-income paper "certified" as safe (I, II, III), even as the actions of central banks make them "certifiably unsafe." Calling the fiscal cliff the Y2K of 2012, Grant says time is better spent searching for cheap assets (MetLife previously). "Stocks bought well are going to do well. Bonds yielding nothing are not." 1 Comment [Quick Ideas]
Monday, November 19, 2012, 1:40 PM "We are in the midst of a major deleveraging in the entire developed world," says BlackRockCIO Rick Rieder, with a rare kind word for those piling into "safe" assets like Treasurys and high-grade corporate debt. He points to an unprecedented aging of the population as keeping a lid on growth. Instead of losses, just maybe a backup in rates will bring forth another wave of cash now sitting on the sidelines. 1 Comment [U.S. Economy, Global & FX]
Tuesday, November 6, 2012, 12:33 PM Jeff Gundlach backs up his public caution on longer-dated Treasurys by taking the modified duration of his Total Return Fund to just 1.59 (the fund would lose 1.59% in value in the case of an immediate 100 bp rise in rates). By comparison, Pimco's Total Return Fund is at 4.02. 1 Comment [U.S. Economy]
Monday, November 5, 2012, 10:41 AM The Treasury market is pricing in an Obama victory, says Janney's Guy LeBas, as southward-heading yields suggest no imminent change to monetary policy. Left unexplained by LeBas is how a Romney victory would change monetary policy. Besides, many suspect the Fed runs the President, not the other way around. 5 Comments [U.S. Economy]
Thursday, November 1, 2012, 2:25 PM Should Treasury yields rise on back of a Romney victory, use the price weakness to buy, says Pimco's Josh Timons. The conventional wisdom - that the Fed becomes more hawkish with Romney as president - is likely wrong, with even the candidate himself backing away from the "fire Bernanke" attitude which served well in the primaries. 7 Comments [U.S. Economy]
Monday, October 29, 2012, 8:46 AM Pessimism grows at businesses, an NABE survey finding about two-thirds of corporate economists see GDP growth of just 1.1%-2% over the next year, nearly double the amount expecting such 3 months ago. Just 5% of those surveyed expect growth exceeding 3%. Priced in? Those buying the long bond at less than a 3% yield better hope not. 2 Comments [U.S. Economy]
Tuesday, October 23, 2012, 2:56 PM Treasury bond holdings at Bill Gross' Total Return Fund stood at just 9% of assets on Sept. 30, according to Morningstar, down sharply from 21% at the end of 2011. The move echoes a costly one Gross made at the start of 2011. One difference - much of the money pulled out of Treasurys has gone into TIPs, which now account for 11% of fund holdings. 5 Comments [U.S. Economy]
Tuesday, October 23, 2012, 1:00 PM Treasury bond bulls as far back as memory goes, Hoisington and Hunt remain so, explaining how Federal Reserve actions serve to slow economic activity. Rising CPI during QEs I and II "had a devastating effect on workers' incomes," they write. Bernanke's wealth effect is a myth, they say, with zero benefit for those with incomes less than $130K, and negligible help for those over. As always, a great read. 6 Comments [U.S. Economy]
Friday, October 19, 2012, 2:18 PM A nice chart from Goldman makes clear the risk in holding long-term Treasury paper at these yields. While a 100 basis points increase in rates hurts anyone holding Treasurys, low yields effectively lengthen a bond's duration, making a rise in rates especially painful. Rates were high enough in the 80s that even a 100 basis point spike in yields still left Treasury owners with a positive return - now that's good risk/reward. 1 Comment [U.S. Economy]
Thursday, October 11, 2012, 8:23 AM Bonds are expensive, but so is hurricane insurance in Louisiana, writes Keith McCullough, recommending everyone's favorite hated asset as protection against a slowing economy and Bernanke's bubbles. Oct. 2012 is reminding him of Oct. 2007, when investors were more concerned with the past (double-digit gains YTD) than the future (sliding earnings). Also good insurance: The dollar (UUP) and utilities (XLU). 2 Comments [U.S. Economy]
Tuesday, October 9, 2012, 7:32 AM A chart "that should scare every bond investor," the yield on the 10-year Treasury has slipped below the S&P 500 dividend yield. The last time it happened - for a brief period during the financial crisis - Treasury yields were about 100 basis points higher a few weeks later. 5 Comments [U.S. Economy]
Tuesday, October 2, 2012, 8:18 AM JPMorgan's Treasury client survey shows a big bump in those short government bonds from 9% to 15%. The longs decline from 25% to 17%. Those neutral (the smart ones given that the Fed is in charge of rates across the curve) are at 68%. 2 Comments [U.S. Economy]
Wednesday, September 19, 2012, 9:11 AM The Fed owns about half or even a majority of Treasurys across several different maturities along the yield curve. If we toss in holdings by China, Japan, and banks borrowing for free from the Fed, are there any real-money investors still holding U.S. government debt? 5 Comments [U.S. Economy]
Saturday, September 15, 2012, 11:00 AM "Do you know what the loss would be on a 30-year Treasury if it went back ... just to the yield in force in 2011?" asks Jeff Gundlach, incredulous anybody would buy one (answer: 37%). If you need safety and yield, he says, buy Campbell Soup (CPB) instead. Listen to why the hot-shots at his firm would rather day-trade Facebook than divine the Treasury market. 48 Comments [U.S. Economy, Quick Ideas]

VGLT Vanguard Long-Term Government Bond Index ETF

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Vanguard Long-Term Government Bond Index ETF