Bonds 05 (Sep 17 - Sep 23)

[behappyalways]

10 year treasury breaking out

#JoblessClaims drop sharply, #GDP jumps to 2%.

This all sets up for another #FederalReserve rate hike in July & now at minimum 2 more this year.

Risk of policy error increases the higher rates go.

10 year bull wedge breaking out, channel is next. Posted this alert just days ago.

https://twitter.com/GarethSoloway/statu ... 0979513345

[winston]

China is in default on US$1t in debt to US bondholders

By Surin Murugiah

The Hill said that the American Bondholders Foundation (ABF), serves as trustee with power of attorney for some 20,000 bondholders, whose bonds are valued at well more than US$1 trillion (RM4.6 trillion).

The first step would be to acquire the Chinese bonds held by the ABF and utilise them to offset (partially or in whole) the US$850 billion-plus of US treasuries owned by China (reducing up to US$95 million in daily interest paid to China). This would lower the national debt and put the US in a better financial position globally.

The second would be to pass legislation that requires China to abide by international norms and rules of finance, trade and commerce. This would include abiding by the transparency rules of capital markets and exchanges and ending its practices of exclusionary settlement, discriminatory payments, selective default and rejection of the successor government doctrine of settled international law.

If China fails to meet those obligations, it would be barred, together with its state-controlled entities, from access to all US dollar-denominated bond markets and exchanges.

Source: theedgemalaysia.com

https://theedgemalaysia.com/node/673621

[winston]

China stops buying free-trade zone bonds

China is said to have stopped buying bonds issued in the Shanghai free-trade zone, to rein in risk and is expected to hold off on unveiling aggressive stimulus or big economic reforms at the politburo meeting later this month.

The People's Bank of China in May told lenders that they can only buy notes sold in the China (Shanghai) Pilot Free-Trade Zone if the issuers have genuine operations in the area, in an increased scrutiny of the US$18 billion (HK$140.4 billion) market mostly used by local government financing vehicles.

There hasn't been a single FTZ bond sold after June 16, it said.

This came as Goldman said its clients did not expect major policy easing measures or structural reform measures to be rolled out during the politburo meeting.

Structural reforms - which could address problems in the property market or the financing challenges of local governments - would not be announced soon, Goldman economists added.

Meanwhile, China Index Academy said further stimuli are needed to support the sluggish property market as many potential buyers are still worried that their income and property prices may drop in the future.

While state-owned developers posted a rise in sales, private players continued to see a slide. China Overseas Land and Investment's (0688) contracted property sales surged by 30 percent to 180.2 billion yuan (HK$194.9 billion) in the first half of this year from a year ago and that of Poly Property (0119) soared 127 percent to 37.4 billion yuan, filings showed. CIFI (0884), in contrast, saw contracted sales sink by 33.6 percent to 41.94 billion yuan.

Source: Bloomberg

https://www.thestandard.com.hk/section- ... zone-bonds

[winston]

Five Steps for Avoiding the Credit-Market 'Bombs'

By Mike DiBiase

1. Only put your money to work in safe distressed bonds with attractive returns given the level of risk.

2. Stay away from corporate-bond mutual funds and corporate-bond exchange-traded funds ("ETFs").

3. Build your cash stockpile. It's OK to sit on the sidelines and wait for the best opportunities to emerge.

4. Diversify your bond portfolio across at least 10 positions.

5. Try not to be too exposed to any single market sector.

Source{ Stansberry's Credit Opportunities

[behappyalways]

Call Open Interest in the iShares 20+ Year Treasury Bond ETF $TLT is more than triple the OI for Puts signaling that options traders are betting that interest rates are primed to drop.
https://twitter.com/Barchart/status/1681048757121478656

[behappyalways]

It remains exceptionally unattractive for Japanese investors to buy U.S. Treasurys

Currency hedging costs far exceed the yield pickup

Negative carry of >300 basis points
https://twitter.com/JackFarley96/status ... 5545007105

[behappyalways]

Tailing 2Y Auction Prices At Highest Yield Since 2007
https://www.zerohedge.com/markets/taili ... yield-2007

[behappyalways]

A good watch. US will have to start issuing long duration bonds in August due to 20% limit rule on short term debts. This might have impact on long term bond yield.

Three major creditors dump U.S. Treasuries
三大债主齐抛美国国债
https://m.youtube.com/watch?v=zB5VeL5GyPk

[behappyalways]

Yields Surge After Treasury Boosts Auction Sizes More Than Expected, Sees Debt Issuance Tsunami On Deck
https://www.zerohedge.com/markets/yield ... ce-tsunami

[behappyalways]

Hedge Funds Added To Record Treasury Shorts Ahead Of Yield Plunge, JPM 'Tactically Long' 5Y Bond
https://www.zerohedge.com/markets/hedge ... ng-5y-bond