Not a pretty picture this week in high yield munis. And look at the volume on the downside the other day and today. Could be due to some scuttlebutt on the taxing of munis, but who knows? This is reason number 1001 why I would never touch an exchange traded ETF with a ten foot pole.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=hyd&insttype=&freq=&show=&x=25&y=20Does everyone have a precise exit point for their bond portfolio such as a mental trailing stop if the flight from bonds finally occurs?
Comments
We don't have any muni investments, but I watch this area, too.
Muni's appear to have lost more ground today (Friday), and noting a broad selection of Fidelity's muni offerings that I have watched this week; appears that state and broad based muni funds will give up in the range of -.4% through at least -1.0% for the week.
I will admit that I don't understand what is going on in this area, at this time; although one short blip I noted, stated that there was a lack of demand, versus actual selling.
As to an exit point. The first major watch point would be sustained negative pricing for a 5 day business period. This would likely have to show in multiple bond sectors; although there will be the first in line to reflect changes. There has been flattening in some sectors for the past several months, with some areas regaining some of the lost pricing. Selling any areas/funds would not necessary be enmass for a holding, but perhaps 25% at a time.
The above noted is written in the sense of a gradual decline in pricing, versus very erratic moves at a faster pace.
This chart is a mixed bag of some bond funds we currently hold.
The chart will load as a line graph at 200 business days time frame. Move the left side slider located at the left end of the slider to the right for about a 100 period current through Dec. 13 and review the chart again. At this point, you may also choose to go to the far left and click upon the teal and red (Histogram charting) for a bar chart view. Now move the slider further to the right for a 30 day view.
This may give a better perspective of recent returns for these sectors. Obviously, we have a few bond funds that have lost some juice; or the managers have lost some juice.
While we can't expect to pull 1% a month from most of our bond funds, this will likely be our average return of the full mix for the YTD.
Some of these funds may get a rework after we return from the holiday period, which will find me/us away from electronic devices with which to make any changes.
I don't find comfort in this fact; as it seems every time we are away somewhere, the market does some funny stuff.
Needless to say, this is all speculation at this point in time, with all of the political games in place at this time. What a way to end an investing year, eh?
Regards,
Catch
As ever,
David
I browsed this story earlier. Mr. Dalio, has a most decent record during his investment career; and may have the gift and/or has developed a keen intuition regarding monetary flows.
Thank you.
Regards,
Catch
As for the bond-buying programs -- aka quantitative easing -- that dovetail with the low interest rates, the U.S. central bank alone shortly will eclipse $3 trillion on its balance sheet and is expected to end 2013 north of $4 trillion in electronically created money.
Globally, that figure is, well, a lot.
"When you add up all the central banks in the world, it's going to be over $9 trillion," said Marc Doss, regional chief investment officer for Wells Fargo Private Bank. "That's like creating the second-largest economy in the world out of thin air."
http://finance.yahoo.com/news/why-central-banks-cant-let-204737141.html
Hotel California
In a CNBC interview Wednesday evening, the Wall Street Journal’s Jon Hilsenrath called Dr. Bernanke a “gunslinger.” Our Fed chairman is highly intelligent, thoughtful, polite, soft-spoken, seemingly earnest and a huge, huge gambler. And he’s not about to fold a bad hand. Almost four years ago, I wrote that Fed reflationary measures were essentially “betting the ranch.” This week they again doubled down.
http://prudentbear.com/index.php/creditbubblebulletinview?art_id=10737
In for a penny in for a pound. Things initiated as temporary are how the world is now.
A bond debacle in the form of lessened bond fund nav's may be of a lesser concern
amongst imagined and unimagined outcomes of a confrontation at OK Corral.
The actions and behavior of financial markets and credit markets are of primary
importance precisely because leadership elected and appointed deem them secondary.
Several former sovereign states now wards of super-sovereign states have come to understand the unspoken ordering of things or yet failing to understand are living with its dictates just the same.
"Inside the Risky Bets of the Central Banks"
Serious matters follow appetizers, wine and small talk, according to people familiar with the dinners. Mr. King typically asks his colleagues to talk about the outlook in their respective countries. Others ask follow-up questions. The gatherings yield no transcripts or minutes. No staff is allowed.
"A big secret of central bank cooperation," Mr. King said, "is that you can just pick up a phone and have an agreement on something very quickly" in a crisis.
This summer, the central banking clique kept in close touch as they readied for a new round of monetary activism. On June 8, Mr. Bernanke and Mr. King spoke by phone for a half-hour before policy meetings at their central banks, according to Mr. Bernanke's phone records, obtained in a public records request. A few days later, Mr. Bernanke spoke by phone with Mark Carney, head of the Bank of Canada—and last month named as Mr. King's successor. Shortly after, Mr. Bernanke called Stanley Fischer, head of the Bank of Israel, and a former MIT professor who was Mr. Bernanke's dissertation adviser.
On June 18, Mr. Bernanke had an early morning call from his home on Capitol Hill with Mr. Draghi and Mr. King, according to his phone records, as the men assessed the impact of the Greek election on Europe's financial system.
Mr. Bernanke sat quietly during the discussion. But he and the other major central bankers were already primed to launch a new monetary onslaught.
A few days later, the ECB announced an agreement to buy bonds of struggling European governments in exchange for a country's adherence to fiscal austerity.
Then the Fed announced plans to buy bonds every month until U.S. job market improves "substantially." The BOJ, despite Mr. Shirakawa's hesitance, soon followed with news it also was expanding its bond-buying program.
http://online.wsj.com/article/SB10001424127887323717004578157152464486598.html
http://www.globaliamagazine.com/?id=1404
You're in good hands with AllState.
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=hyd&insttype=&freq=&show=&x=28&y=15
David