Salient to Investors: Derivatives traders are signaling little chance of a bear market in bonds for the next three years, because the Fed continues to flood the financial system with money to boost the economy. William O’Donnell at RBS Securities said the focus of the Fed is still unemployment, which it sees as not
READ MORE... →Salient to Investors: Rising long-term rates indicate traders expect the economy to pick up. Bill Gross at Pimco is avoiding long-term bonds, and sees US inflation benign in 2013 and possibly rising in 2014 to 2016 on faster inflation. Hiroki Shimazu at SMBC Nikko Securities said the recovering global economy is pushing up
READ MORE... →Salient to Investors: Bill Gross at Pimco said: The increase in unemployment in January gives bond yields room to decline. Central bank stimulus has made bond markets bubbly. Avoid longer-maturity governments because of the inflation risk from quantitative easing et al. As long as check writing in the trillions continues, it’s a foundation for
READ MORE... →Salient to Investors: Christopher Sullivan at United Nations Federal Credit Union said we have settled at higher yields as the market is suspicious of low bond yields when risk assets are rallying – the market is focusing more on positive indicators of moderate strength than negative numbers. Thomas di Galoma at Navigate
READ MORE... →Salient to Investors: Treasuries are trailing stocks by the most since October 2011. Hiromasa Nakamura at Mizuho Asset Mgmt said the current rise in yields is due to Fed easing, while investors expect money to go into riskier assets, and equity markets are rising. Bill Gross at Pimco said unprecedented central
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: The era of increasingly cheap money is showing signs of ending in the mortgage bond market. Bill Gross at Pimco said bond investors should anticipate reduced returns as bets on mortgage securities are over in terms of the capital appreciation – expect total returns in 2013 of 3 to 4 percent. Brean
READ MORE... →Salient to Investors: Jay Schwister at Baird Advisors said Pimco underestimated how big the policy response would be and what type of positive impact it would have on financial markets, despite the new normal they forecast is playing out. Saumil Parikh at Pimco said policy distortions cannot continue indefinitely, so 2013
READ MORE... →Salient to Investors: Bill Gross at Pimco said: Stocks and bonds will return less than 5 percent in 2013 due to a sluggish economy as the effect of Fed stimulus diminishes Structural headwinds lower real GDP to below 2 percent in the US and other developed nations. Bernanke is not Rumpelstiltskin and can
READ MORE... →Salient to Investors: Economists expect the 10-yr Treasury yield to end 2013 at 2.17 percent. Bill Gross at Pimco expects Treasury 5-yr notes to yield 0.7 percent at the end of 2013 versus 0.72 percent today, and the dollar to decline and oil climb above $100 in 2013. Gross expects stocks
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