Salient to Investors: James Hamilton at the University of California said interest rates are climbing as asset purchases help bolster confidence in economic growth. Hamilton said the economy picking up puts upward pressure on yields regardless of what the Fed is doing on the bond supply side, pleasing the Fed. Jonathan Wright at Johns Hopkins said
READ MORE... →Salient to Investors: John Griffin, Jordan Nickerson and Dragon Tang at the University of Texas said Standard & Poor’s and Moody’s inflated their grades on securitized debt prior to the financial crisis to match each other’s opinions to avoid losing business. CDOs rated AAA by both companies defaulted more often than securities with
READ MORE... →Salient to Investors: Venezuela bondholders have returned 14.7 percent annually, double the emerging-market average, enriching investors from OppenheimerFunds to Goldman Sachs. Sara Zervos at OppenheimerFunds said Chavez has done little good for Venezuela, but has serviced the bonds, and the Venezuelan securities are more attractive than Brazilian bonds, which offers little upside. Zervos said
READ MORE... →Salient to Investors: The median economist expects the Fed’s latest round of bond buying to reach $1.14 trillion before he ends the program in Q1 2014, and the economy to grow 2 percent in 2013 versus the FOMC forecast of 2.3 percent to 3 percent. 57 percent of economists said the
READ MORE... →Salient to Investors: Jay Wong at Payden & Rygel said continued earnings beats is helping drive the market, which has a lot of momentum. The Index of consumer confidence was the weakest since November 2011 and lower than the most pessimistic forecast in a Bloomberg survey. 75 percent of the 179 S&P
READ MORE... →Salient to Investors: Scott Sherman at Credit Suisse said the economy is on better footing. William O’Donnell at RBS Securities said you just can’t hold rates down, they keep jumping back up, with a lot of resistance around 2 percent. RBS forecasts the 10-year yield to decline to 1.90 percent by end of
READ MORE... →Salient to Investors: Sean Callow at Westpac Banking expects clear reiteration from the Fed that quantitative easing will continue for some time. Callow said the strong dollar story is tough to make right now, and the growth differential will be supportive for the euro against the dollar in the next few
READ MORE... →Salient to Investors: Handing monetary policy to independent central bankers appears to have worked. The Cleveland Fed says markets expect US inflation over the next 10 years to stay below 1.5 percent, while the IMF expects below 2 percent in advanced economies and 6 percent in emerging markets for the
READ MORE... →Salient to Investors: The difference between G-7 bonds excluding Treasuries and US government securities was the least since July 2011. Hiroki Shimazu at SMBC Nikko Securities said Treasuries are unattractive because recovery in the US in continuing and inflation expectations rising. Shimazu said 10-yr rates will exceed 2 percent by year-end. George Soros
READ MORE... →Salient to Investors: George Soros said: The world still does not fully understand how financial markets work – the established theory has collapsed. Germany is out of tune with the rest of the world in handling the euro crisis. There is a risk of a credit bubble, the big, unresolved
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