The Banking and Strategy Initiative

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Are you still trading in bonds? | Advantage zyaada

Well, here it is again. The government issued itself $1.3 trillion to wash everyone’ s legacy safes of all the debt assets with Lehman, AIG, GS and many others. It’s still with them. So instead of buying Treasuries people bought up $375 billion in debt, corporate yields rose 50% in 2009 and High Yield Debt ( Junk) yields rose 80%. Well inflation is here to stay and with equities doing well, the last thing you want to do is buy debt that will lose value on a daily basis. As we also told you in the banks’ strategy pice of date, he systemic risk will count for much higher going forward in the visible part of the iceberg going forward. A California Mortgage Lender issued $400 million just last Monday

This thirst for yield and risk started when rates were low may no longer be the best use of cash going forward. The high yield bonds and these “options” and bells and whistles on the bonds like Covenant Light Loads are what was the worst even in 2006 according to this Marketwatch Easter Wrap. These are not just fallen angels. It’s a wrap up and new issuers likely to emerge with investment grade ratings

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This entry was posted on April 4, 2010 by in Bonds, Emerging Markets, Financial Markets, Investments, Retail Lifestyle, US and tagged , .


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