Salient to Investors: Bill Gross at Pimco recommends avoiding longer-term Treasuries because of steps to boost the economy. Guy Davidson at AllianceBernstein said longer bonds have much more downside than upside, and recommends switching to the 10-yr to 15-yr maturity range. The median economist expects the Fed to continue to buy Treasuries at
READ MORE... →Salient to Investors: The bond market shows no anxiety of inflation risk – the break-even rate for 5-yr TIPS, or yield difference between inflation-linked debt and Treasuries, is 2.07 percent. The median economist expects growth of 2.2 percent in 2012 and 2 percent in 2013. Dean Maki at Barclays is convinced the Fed will get it just right,, and thus is providing
READ MORE... →Salient to Investors: 48 of 49 economists predict the FOMC will buy Treasuries to increase its program to buy $40 billion in mortgage bonds each month, and expect the Fed to wait until its March 19-20 meeting before adopting thresholds on unemployment and inflation.The median economist expects Fed purchases at least through Q1 2014. Economists expect a
READ MORE... →Salient to Investors: Thomas Roth at Mitsubishi UFJ Securities USA said the 3-yr auction won’t be a big deal because of plenty of buyers, and everyone thinks the expiration of the TAG program will cause a wave of inflows. Craig Collins at Bank of Montreal said 3-yr notes are at expensive, historically rich levels.
READ MORE... →Salient to Investors: The bond market expects inflation to remain contained for the next decade. David Brownlee at Sentinel Asset Mgmt said inflation is on the backburner until you see a strong economy, so rates will be relatively low. Gregory Whiteley at DoubleLine Capital said the money created over the past few years
READ MORE... →Salient to Investors: Stephen King at HSBC said inflation is not the central banks’ highest priority, and as long as people believe they are committed over the longer term to price stability, there is leeway to play for other objectives. HSBC said the MSCI All Country World Index will return 9 percent in 2013 on aggressive
READ MORE... →Salient to Investors: Operation Twist is scheduled to end soon – Capital Economics said the Fed doesn’t have any more short-term Treasury securities to sell, at least not with maturities of less than three years. Kathy Jones at the Schwab Center for Financial Research said the bond market can count on the Fed to hold
READ MORE... →Salient to Investors: Bill Gross at Pimco said: Interest rates are so low and corporate spreads so tight that you have to be leery of prices going the other way. Structural headwinds may reduce real GDP below 2 percent in the US and other developed nations. With globalization, technological and demographic changes
READ MORE... →Salient to Investors: Robert Baltzer at Baillie Gifford said corporate bonds will make less in 2013 after 4 years of annualized gains of at least 15 percent. Baltzer has become more nervous while the market has become less nervous, and has reduced banking securities because he sees significant systemic risk in European banks. Since the collapse of
READ MORE... →Salient to Investors: David Rosenberg at Gluskin Sheff said: the economy is stuck in the mud and it will be a wageless recovery – the fiscal cliff would trigger a recession. Housing is bottoming out. and banking is on the mend and banks are more willing to lend money. likes gold-mining stocks and utilities, dividend-paying healthcare, utility and consumer-staples stocks. likes
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