Zero Bonds
Bond Market Summary
The cyclical bull market still lives, but the best of the move is behind us. 9% T-bond yields may be realized in the next year or so, but shorter-term not much upside action is expected from current levels with a 10.40%-11.40% range expected to prevail for a few months.
Bond Market Summary
The cyclical bull market still lives, but the best of the move is behind us. 9% T-bond yields should be realized in the next year or so, but shorter term not much upside action is expected from current levels. Actually, a correction seems more likely, maybe to 11.3%-11.5%.
Bond Market Summary
May was a dynamite month for bonds, with total returns of 9%-10% registered for most long issues. Long zeros racked up gains in excess of 20%. The bond market now is ahead of itself although the Major Trend remains bullish.
Bond Market Summary
After drifting lower in December, the bond market drifted higher in January. Corporates turned in the best showing, with two-point gains fairly typical. Municipals were up 1 1/2 points while Long T-bonds moved up about a point. Yields declined 20 to 40 basis points, depending on the type of security.
View from the North Country
A new set of risk-reward tables has been designed, exclusively for Zero Bonds. These tables will be part of a November Special Research Study, coming out under separate cover. But one of the timelier tables is previewed here.
Bond Market Summary
The bond market is in the midst of both secular and cyclical bull moves. The cyclical bull market target zone is 9% yields for T-Bonds in the next 12-18 months. Maybe much lower on a secular basis. The recent correction carried to our 12% T-Bond buying zone and we loaded up again.
“Zero” Bonds Vs. Stocks…A Long, Long-term Perspective
A 12% annual compound growth rate can be locked in through the purchase of Treasury “Zeros.” Over 23 years this is a government guaranteed 1250%+ total return. In this extended research piece, risk is evaluated and the mechanics of creating and buying Zero bonds are discussed. Frankly, we were astounded by the results of this study.
View from the North Country
A preview of this issue’s “In Focus” feature on the relative attractiveness of “Zero” Treasury securities. Also, an Inflation Watch update: The caution flag is still up, but our monitoring tools are in no worse shape than a month ago. Actually, a few are just a shade less ominous.
View from the North Country
Merrill Lynch was first but the rush is on, stripping existing T-Bonds of their coupons, repackaging and selling coupons and principal separately. While perhaps priced too high for sharp pencil pushers, to us they look like a very good investment. Corporate “zeros” should, however, be viewed very cautiously.
Are Bonds Too Popular Now?
Dedicated portfolios, TIGR types, long-term bond buy and holders and bond traders soaking up the government financing like so many sponges. For long-term T-Bonds at least, the demand may be greater than the supply for a while, creating a premium situation. It’s hard to believe a T-Bond could become an investment rarity, but these are strange times.
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