Bonds 04 (Jul 15 - Aug 17)

[winston]

It's Dangerous Out There in the Bond Market

by Anchalee Worrachate

Investors face damaging losses if yields rise even a little

A half-percentage point increase would wipe out $1.6 trillion

Source: Bloomberg

http://www.bloomberg.com/news/articles/ ... ck-allianz

[winston]

The Best Time to Sell Junk

By Jeff Clark

It's time to get rid of your junk.

High-yield bonds – also known as junk bonds – have enjoyed a tremendous rally over the past two months.

The iShares iBoxx High Yield Corporate Bond Fund (HYG) is up 11% since mid-February. That would be a great move for a regular stock. But HYG is a bond fund… and double-digit returns in just two months are rare.

And, by the look of the following chart, junk bonds are not likely to continue that performance…

Take a look at the chart below…

Please Enable Images to See this

HYG has rallied all the way back up to the red resistance line that connects the September and October highs. This is a normal area to expect at least a minor pullback. And we have good reason to suspect that HYG could be on the verge of a major downside move.

You see, as HYG has made higher highs over the past few weeks, the moving average convergence divergence (MACD) momentum indicator has produced lower highs. This "negative divergence" is often an early warning sign of an impending decline and a possible change in trend.

Just look at the action going into the February bottom. HYG was declining and making a series of lower lows. Meanwhile, the MACD momentum indicator was producing higher lows. This was a good example of "positive divergence" – an early sign of a rally.

Today, we're looking at a mirror image of that setup.

Positive divergence on HYG back in February told us it was probably a good time for aggressive traders to be buying junk bonds. Now, after an 11% rally in two months – with HYG approaching significant resistance, and with negative divergence on the chart – this is probably a good time for traders to be selling their junk.

Source: Groth Stock Wire

[winston]

Bonds (10 year): 1.83% versus 1.83%.

Hit 1.87% on the session high but bonds then rallied back.

More discussion of negative rates (in the future) for the US with negative mortgage rates (yes, paid to take out a mortgage)
offered as a carrot to make the 'pay to hold your dollars' a bit more palatable.

Source: Investment House

[winston]

Dim sum bond investors are on alert.

The surprise privatizing of state-owned China City Construction last week has ignited a debate over creditor rights.

Similar cases are likely as Beijing will not bail out everyone in trouble.

Source: Dr Check, The Standard

[winston]

3 High-Yield Bond ETFs to Boost Your Income

ANGL, PCEF and EMHY stand out from the pack

By Aaron Levitt

Source: Investor Place

http://investorplace.com/2016/05/3-high ... yvz7vl96M8

[winston]

Bonds (10 year): 1.78% versus 1.74%.

A more definitive move the past week as TLT bounced off the double bottom at the 50% Fibonacci retracement of the
December to February rally.

Source: Investment House

[winston]

Bonds (10 year): 1.70% versus 1.75%.

Bonds gapping higher and rallying to a May peak.

Just below the early April peak now.

A series of strong Treasury auctions pushed yields lower.

Source: Investment House

[winston]

GS prefer Credit to Equitys

Since 2009. U.S. high-yield credit has a Sharpe ratio of 2, compared to 0.58 for the S&P 500.

Higher Sharpe ratio means higher risk-adjusted returns.

As such, Goldman prefers U.S. high-yield credit to S&P 500.

It also prefers European high-yield credit to investment-grade credit.

Source: Barron's Asia

[winston]

Bonds (10 year): 1.85% versus 1.85%.

Sold hard Wednesday from last week's high, closing out the week with a lateral move at the 50 day MA.

Still very much in a four month lateral trading range.

Source: Investment House

[winston]

Chinese Bonds

In China, we saw worries in the bond market. Bloomberg said Chinese firms issued 382.7 billion yuan ($451 billion) of notes onshore this month, down 11 percent from April and down 57 percent on March.

With just eight trading days to go, fundraising may fall short of the record 547.3 billion yuan of debt due. That would mark a shift after sales were 83 percent more than maturities in April and almost three times higher in March.

The faltering US$3 trillion bond market will test Premier Li Keqiang's resolve to weed out zombie companies.

Triple-A-rated Shandong Iron & Steel, which just canceled a three billion yuan bond offer on May 4, has three billion yuan of securities due in May and 30 billion yuan to repay this year.

Analysts said such steel firms started to make money in the first few months of the year. We need to avoid steel shares until more stronger data shows.

Source: Dr Check, The Standard