Tuesday, November 22, 2016

Bonddad's Tuesday Linkfest

F. Hale Stewart is a financial adviser with Thompson Creek Wealth and a transactional attorney, specialising in asset protection and advanced tax planning. 

Chicago Fed National Activity Index

Overall Index

1-Year of the Index's Components

Is the Bond Market Sell-Off Overdone?

The global bond market rout triggered by Donald Trump’s US election victory looks overdone, according to bond investors now betting that the sell-off was too violent and that borrowing costs will remain contained into the start of the new year.

Mr Trump is expected to unveil a large, inflation-fuelling economic stimulus package of infrastructure spending and tax cuts, which has stoked fears of an end to the three-decade bull market in bonds. The global fixed income market lost more than $1.8tn of value over the past two weeks, sending yields — which move inversely to prices — to a nine-month high on Friday.

But some big investors are betting that the bond turmoil has been excessive, and are dipping back into the market, especially in areas such as US corporate debt, which now offers more attractive returns.

1-Year Chart of the Treasury Market ETFs

1-Year Chart of the Vanguard Intermediate Bond ETF

1-Year Chart of the Vanguard Long-Term Corporate Bond ETF