Salient to Investors:

  • Christopher Orndorff at Western Asset Mgmt said we are seeing mostly a lack of liquidity in the bond market: dislocation like this exacerbate price movements more than what we would have seen 10 years ago.
  • One person (Gross) affecting borrowing costs worldwide shows the increasing fragility of credit markets. Debt still largely changes hands off exchanges, through telephone calls and e-mails.
  • Banks are less willing to cushion big swings using their own balance sheets because it has become increasingly difficult to trade debt as new regulations prompt them to curtail their holdings.
  • Eric Jacobson and Bridget Hughes at Morningstar say the impact of Pimco Total Return’s size remains under examination.

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