“What is the next big short? The money that was made from 2007 to 2009 on the subprime mortgage short provided some of the most staggering profits that hedge funds ever realized. Heavy hitters like John Paulson reaped huge gains, while newcomers like Kyle Bass not only had tremendous gains, but also solidified a reputation that exists to this day. Many people could see the bubble. The problem was the carry.”
Comments »Spanish Bond Yields Drop to 8-Month Low
“Spain’s bonds rose, pushing the 10- year yield to an eight-month low, on optimism Prime Minister Mariano Rajoy will take steps to stabilize the nation’s debt, easing the euro-region’s financial crisis.
Italy’s 10-year yield tumbled to the least in almost two years as its borrowing costs dropped at an auction of about 6 billion euros ($7.8 billion) of five- and 10-year debt. Austrian and Belgian yields fell to records for a second day. German bunds slipped before U.S. Treasury SecretaryTimothy F. Geithner meets congressional leaders in an effort to avoid the so-called fiscal cliff.”
Comments »Borrowing Costs in Italy Drop to Two Year Lows
“Italy sold three-year bonds at the lowest rate in more than two years and the Treasury took advantage of growing demand for the country’s debt to auction securities with a maturity longer than 15 years.
The Rome-based Treasury sold 3.5 billion euros ($4.5 billion) of its benchmark three-year bond today to yield 2.64 percent, less than the 2.86 percent at the last auction of the same securities on Oct. 11. The Treasury also auctioned 1.5 billion euros of debt due in 2023 and one in 2029, the first sale of a security with a maturity of more than 15 years since May 2011.”
Comments »$ALV Warns of Bond Bubble Fueled by Low Interest Rates
“Allianz SE (ALV), Europe’s biggest insurer, said low interest rates have caused a bubble in the government bond market and may do the same to equities unless central banks tighten monetary policy.
“We have a bubble in sovereign debt, looking at German Bunds, with central banks flooding the markets with liquidity,” Maximilian Zimmerer, management board member in charge of finance and global life insurance, told reporters at an event in Frankfurt today.”
Comments »U.S. Treasuries Continue to Rally Over Fiscal Cliff Concerns
“The biggest Treasury rally in five months is underlining market concern that President Barack Obama and House Republicans will fail to avert $607 billion in mandated spending cuts and tax increases starting Jan. 1.
Yields on 10-year Treasuries dropped the most in one day since May to 1.62 percent after Obama’s re-election Nov. 6. A figure below 1.7 percent indicates that investors expect gross domestic product to shrink by 0.3 percent next year as the so- called fiscal cliff takes effect, according to JPMorgan Chase & Co. Rates on longer-term Treasuries have converged with those of non-U.S. government bonds globally, after remaining about 1 percentage point above them in 2011.”
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Spanish Yields Rip Higher as The IMF Disputes Greek Aid Plan
“Spanish bonds fell, pushing the 10- year yield to a six-week high, after the International Monetary Fund failed to agree with euro-area finance ministers on a strategy to help Greece bring down its debt load.
Germany’s 10-year bonds erased an advance after Bild Zeitung reported that the nation favored combining aid payments intended for Greece into a single installment of 44 billion euros ($55.9 billion). European policy makers gave Greece two extra years to reduce its budget deficit without saying how the additional funding needs would be covered. The yields on Austrian and Belgian securities declined to records and French bonds rose for a ninth day, the longest run since 1997.
“There’s clearly big disagreement between the IMF and Eurogroup,” said Lyn Graham-Taylor, a fixed-income strategist at Rabobank International in London. “The public nature of the spat has resulted in risk-off sentiment, which is affectingSpain.”
Comments »The Greenback and Treasurys Continue to Rise
“U.S. Treasuries advanced for a second day and the dollar strengthened on speculation the so-called fiscal cliff and Federal Reserve bond purchases will boost demand for debt. European stocks gained, while Spanish bonds fell after a debt sale.
The yield on five-year Treasuries fell two basis points to 0.66 percent at 7:20 a.m. in New York. The dollar advanced against 11 of its 16 major peers. The Stoxx Europe 600 Index (SXXP) rose 0.4 percent. Standard & Poor’s 500 Index futures added 0.2 percent after yesterday decreasing 2.4 percent. The yield on Spain’s 10-year rose 13 basis points to 5.82 percent. Oil climbed 1 percent and the S&P GSCI gauge of 24 commodities advanced 0.5 percent.”
Comments »Bond Analysts See a Continued Bull Market as Every Bond Market is in Rally Mode
“From the U.S. to Germany and even Japan, where the bond market is twice the size of the economy, investors can’t get enough government securities even though rising debt loads are blamed for curbing global growth.
For the first time since the financial crisis in 2008, all 26 markets tracked by Bloomberg and the European Federation of Financial Analysts Societies are poised to generate positive returns on an annual basis. Gains this year range from Portugal’s 47 percent to Japan’s 1.78 percent.”
Comments »Paper Gets Sold as Italian Bond Yields Fall
“Italian borrowing costs dropped at an auction of 8 billion euros ($10.3 billion) of six-month Treasury bills as investors view the country as a safer bet than Spain even amid rising political tension.
The Treasury in Rome sold the 181-day bills at 1.347 percent, the lowest since March 28 and down from 1.503 percent at the last auction on Sept. 26. Investors bid for 1.52 times the amount of bills offered today, up from 1.39 times last month. Italy returns to the market tomorrow with the sale of as much as 7 billion of five and 10-year bonds.”
Comments »Spanish Bonds Fall, Yields Post Largest Increase Since the Acute Phase in August
“Spain’s government bonds fell, with 10-year yields heading for their biggest weekly increase since August, after a report showed the jobless rate climbed to a record last quarter.
Spanish 10-year securities dropped for a second day as the data added to evidence the economy is worsening after its central bank said this week gross domestic product shrank for a fifth quarter. German bonds gained as French household sentiment worsened and European stocks declined, boosting demand for the region’s safest assets. Italian securities fell as the nation sold a combined 4 billion euros ($5.12 billion) of inflation- linked and zero-coupon debt.
“Contracting pressures in the economy remain persistent” in Spain, said Elwin de Groot, a senior market economist at Rabobank Nederland in Utrecht. “It will be very hard for the Spanish government to achieve its budget targets. It is likely to be negative for the bonds.”
Comments »Pimco Gobbles Up Australian and New Zealand Bonds on Anticipated Rate Cuts
“Pacific Investment Management Co., manager of the world’s biggest bond fund, has boosted holdings in Australia and New Zealand as it expects policy makers to cut interest rates to combat currency gains and weaker world growth.
Decisions in larger developed economies to keep policy rates close to zero and engage in currency market intervention have helped push the Australian and New Zealand dollars higher, according to Scott Mather, head of global portfolio management at Pimco, which oversees $1.8 trillion in assets. The Newport Beach, California-based company’s holdings in the region are at the highest levels “in a very long time,” he said at a briefing in Auckland.”
Comments »Spanish and Italian Bond Yields Fall on Optimism
“Spain’s government bonds advanced, pushing 10-year borrowing costs to the lowest in more than six months, after Moody’s Investors Service said it would keep the nation’s credit rating at investment grade.
Italian and Portuguese securities also rallied amid optimism the euro region is making progress to contain the debt crisis. Moody’s cited a reduction in the risk of Spain losing market accessbecause of the European Central Bank’s willingness to buy the nation’s bonds. German 10-year bunds fell for a third day while two-year notes were little changed after the nation sold 4.19 billion euros ($5.5 billion) of the securities.
Pedestrians pass a Spanish national flag on Cibeles square in Madrid. Photographer: Angel Navarrete/Bloomberg
Moody’s decision is “obviously quite a positive development, as is reflected in this morning’s price moves,” said Brian Barry, an analyst at Investec Bank Plc in London. “I would expect Spanish and Italian debt to trade better today, and for the positive tone to spread across to other risk assets, with safe havens to come back a bit.””
Comments »Exporting Inflation Hits $5.43 Trillion
Spanish Bond Yields Rise Before Stress Test, Paring Monthly Drop
“Spanish 10-year government bonds fell, paring the biggest monthly drop in yields this year, before the nation reveals the results of stress tests on its banks as it seeks to avoid a full financial bailout.
The declines pushed the yield above 6 percent for the third day. German bunds extended their longest run of quarterly gains since 1998 even as a report showed euro-area inflation unexpectedly accelerated in September. French bonds headed for a weekly advance as President Francois Hollande’s government delivered its budget. Moody’s Investors Service may announce a review of Spain’s credit rating.”
Comments »Italy Holds Bond Auctions With Falling Yields
Italy is seen as being less worse than Spain, so bond investors have been willing to bid up paper as yields fall.
Comments »Credit Markets Fade and Erase QE Infinity Effects
Spanish Yields Rise Above 6%
“European stocks fell the most in two months and the euro weakened as Spain’s 10-year yields rose above 6 percent, spurring concern the debt crisis is worsening. Oil retreated for a third day, while Treasuries extended the longest rally since 2008.”
Comments »U.S. Investors Purchase Treasurys at Their Fastest Clip as the Deficit Looms and Euphoria Over QE Diminishes
QE euphoria is beginning to fall as investors gobble up bonds and not risk on assets. This is allowing uncle Sam to run the deficit sky high.
Comments »The Euro Pops Back Above 1.30 While Spanish Bonds Rally
Spain Completes Their Largest Bond auction Since January
“Spain sold 4.8 billion euros ($6.2 billion) of bonds, the most since January, as the Treasury focused on short-term notes that would be targeted for central- bank buying in the case of a bailout.
The Madrid-based Treasury sold 3.94 billion euros of a new three-year benchmark at an average yield of 3.845 percent and 859 million euros of its 10-year benchmark at an average of 5.666 percent. That was the lowest since January and compares with 6.647 percent when it was last sold on Aug. 2.”
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