How to Navigate the Bond Market in 2011

Stocks recovery rally to continue
NEW YORK (CNNMoney) -- Stocks have had a great run since bottoming out nearly two years ago, and Wall Street experts anticipate 2011 to be no different. Investment Strategists and money managers expect the S&P 500 to rise 11%, on average, according to an exclusive CNNMoney survey. In fact, not one of the 32 experts surveyed by CNNMoney think the S&P 500 will decline this year. Email Print Comment "Everything seems to be in place for the Stock Market to rise," said Weeden &...;

Benchmark JGB yield closes higher as stocks rally+
TOKYO, Jan. 4 (AP) - (Kyodo)—The yield on the benchmark 10-year Japanese Government Bond closed higher Tuesday as strong gains in Tokyo stocks triggered selling of safer assets. The yield on the No. 312, 1.2 percent issue, the main yardstick of long-term Interest Rates, ended interdealer trading up 0.040 percentage point from Thursday's close to 1.160 percent. The Bond Market was closed from Friday through Monday for Japan's New Year holidays. The price of the March futures contract for 1...

Fed Likely to Add New Dealers for Treasury Market
Yahoo! Buzz After a hiatus of more than one year, the Federal Reserve is likely to expand a select group of dealers to help with hefty Treasury Debt sales and the Central Bank’s monetary-policy operations, according to traders and dealers familiar with the matter. Demand for safe-haven Treasurys has eased over the past couple of months as optimism over the Economic Outlook sparked more buying interest in riskier assets such as stocks. That means dealers need to play a bigger role in underw...

U.S. stock investors eye January with caution
NEW YORK (Reuters) - Stocks may have kicked off 2011 with a no-holds-barred surge but anyone predicting a sustainable rally through January may be overly optimistic. Many warning signs reveal a market that is ahead of itself after the best December for U.S. stocks since 1991. More signs of economic expansion in key economies, accommodative U.S. Monetary Policy, and upbeat forecasts for corporate earnings underpin the latest moves higher. But the question now is how much of last month's gains we...

U.S. stock investors eye January with caution
By Herbert Lash NEW YORK | Mon Jan 3, 2011 3:30pm EST NEW YORK (Reuters) - Stocks may have kicked off 2011 with a no-holds-barred surge but anyone predicting a sustainable rally through January may be overly optimistic. Many warning signs reveal a market that is ahead of itself after the best December for U.S. stocks since 1991. More signs of economic expansion in key economies, accommodative U.S. monetary policy, and upbeat forecasts for corporate earnings underpin the latest moves higher. B...

Guest Post: 2011 - The Year Of Catch 22
2011 - The Year Of Catch 22 As I began to think about what might happen in 2011, the classic Joseph Heller novel Catch 22 kept entering my mind. Am I sane for thinking such a thing, or am I so insane that asking this question proves that I’m too rational to even think such a thing? In the novel, the “Catch 22″ is that “anyone who wants to get out of combat duty isn’t really crazy”. Hence, pilots who request a fitness evaluation are sane, and therefore must f...

Barron's sees stock market rise
NEW YORK | Sun Jan 2, 2011 4:38pm EST NEW YORK (Reuters) - Wall Street Strategists are Bullish about the market's prospects in 2011, expecting stocks to rise an average of 10 percent, with big-cap shares like Exxon Mobil Corp (XOM.N), Wal-Mart Stores Inc (WMT.N) and Pfizer Inc (PFE.N) leading the way, Barron's reported on Sunday. The business weekly noted the U.S. Stock Market just logged its second straight year of gains following the crushing losses stocks suffered in 2008. "If the stars ar...

Eurozone inflation above bank target in December
Eurostat, the EU's statistics office, said consumer price Inflation jumped 2.2 percent in the year to December, its highest level since October 2008. The increase from November's 1.9 percent rate was markedly ahead of expectations—the consensus in the markets was for a far more modest increase to 2 percent. A more detailed breakdown of the Figures Will be published later this month, but all indications are that higher energy and commodity costs are likely to have been behind the bigger tha...

Forget Optimism: Huge Risks Remain In The Market
The media and Strategists (in particular) are almost universally optimistic and remarkably certain and confident of view. With few exceptions -- here is one -- a smooth and self-sustaining economic expansion has now become consensus. My Hedge Fund cabal, though a relatively small sampling, is talking bearishly but investing bullishly. I continue to see risk in the unresolved tension between the short-term tailwinds of monetary stimulation and the longer-term headwinds of fiscal imbalances (local...

Why Investors Should Pay No Heed to Bill Gross's 'New Normal'
Bill Gross, the leading proponent of the "New Normal" -- the idea that stocks will return just 3% a year for the foreseeable future -- has been wrong over and over again. So why does anyone pay attention to his predictions? Stocks have been a fantastic place to be since the start of 2009. In that year, the S&P 500 stock index rose 23%, and in 2010 it added another 13%. But in a February 2009 interview I did with Gross for BloggingStocks, he moaned about how stocks were a terrible place to ...

What's Pushing Down Treasury Bonds? A Rising U.S. Economy
Stocks may be poised to deliver their best December performance in almost two decades, but it's the machinations in the Bond Market that have been captivating investors recently. The question on market-watchers minds is this: Does the recent rapid rise in yields on U.S. Government Bonds signal a return to economic normalization, or are the nation's creditors finally getting fed up with financing soaring U.S. Deficits? Both sides saw evidence to bolster their views this week. The doomsayers g...

Dollar could face wild ride in 2011
NEW YORK (CNNMoney) -- If the past 365 days are any indication, 2011 could be a wild ride for the U.S. dollar. The Dollar and euro have had a love-hate relationship. The greenback has gained more than 8% since January but one look at the chart above shows the year has been a series of ups and downs. In June, the euro tumbled to a four-year low against the dollar, when the near-collapse of the Greek Economy caught the market by surprise. Email Print Comment Progress was made in repairing the g...

Governments Help Markets Score Big in 2010...
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Jeffrey Rubin: Is There Enough Oil to Pay Our Debt?
2010 left us all with a mountain of Debt. Whether you're a Taxpayer in the UK, Ireland or the US, it must already be pretty clear that you're on the hook for a lot of IOUs borrowed from your future. You may not have borrowed the money yourself, but your government has already done it on your behalf, running up massive, record-setting Deficits. What's not clear is exactly how your government is going to pay that debt back. With Students already Rioting in London over huge Tuition increases, an...

Treasuries tread water ahead of Fed minutes
NEW YORK (CNNMoney) -- Treasury prices were little changed Tuesday, as traders awaited minutes from the Federal Reserve's latest policy meeting. A stronger-than-expected report on factory orders did little to move the market out of its rut. Email Print Comment Meanwhile, sales figures from major auto companies will be released throughout the day. Economists polled by Briefing.com expect auto sales to have edged lower. With no auctions scheduled, the closely-watched jobs report on Friday is re...

Moving Beyond Fannie and Freddie
The new Congress, with a Republican House and a much narrower Democratic majority in the Senate, offers an opportunity for real reform of the housing-finance system. Up to now, most of the "reform" ideas floating through Washington have been designed to maintain a federal role. But if the 2010 election means anything, it is that the American People want the government to stop pursuing policies that put the Taxpayers at risk for private failures. The policy case against further government suppo...

2011: Year of the bank run?
2011: Year of the bank run? Posted by Colin Barr January 3, 2011 6:27 am Is a bank run about to bring Europe to its knees? Some market watchers say yes, pointing ominously to the torrents of money pouring out of Ireland. Not such a good bet Irish bank deposits declined in November for the fourth straight month, the Central Bank said last week. Overseas deposits fled the country at their fastest pace in more than a year. The deposit flight compounds the stress on a Financial System whose ma...

2011: Year of the bank run?
Irish bank deposits declined in November for the fourth straight month, the Central Bank said last week. Overseas deposits fled the country at their fastest pace in more than a year. The deposit flight compounds the stress on a Financial System whose massive property-lending losses already have driven the government to accept an unpopular Bailout from the European Union and the International Monetary Fund. Worse yet, it shows that the solutions policymakers slapped together in the fall of 2008 h...

AAII Asset Allocation Survey: Bond Holdings at a 10-Month Low
From AAII.com: Individual investors kept their portfolio allocations to equities essentially unchanged last month, according to the latest AAII Asset Allocation Survey. Stock and stock Mutual Fund allocations were 62.2% in December. The historical average is 60%. Bond allocations fell for a third consecutive month. Individual investors held 20% of their portfolios in bonds and bond funds in December, a 1.8 percentage-point decline from November. This is the smallest allocation to Fixed Income ...

TrimTabs: "No Amount Of QE Will Be Able To Keep The Current Stock Market Bubble From Bursting Eventually"
, and CNBC trucked out TrimTabs' Charles Biderman to a de minimis audience, knowing full well that a man with his understanding of money flows would very likely repeat his statement from last year, that there is no real, valid explanation for the inexorable move in stocks higher, as equity money flows in 2010 were decidedly negative, and any explanation of the upward melt up would need to account for Fed intervention (and no-volume HFT offer-lifting feedback loops but that is a story for another...

Economic Outlook: A rising challenge
Published: Jan. 4, 2011 at 9:53 AM Expect to see the media in Asia, the United States and Europe pay more attention to Inflation this year. That's right: There will be an inflated focus on Inflation this year, especially if a global recovery marches along as policymakers order it to do. Inflation is that dicey counter-transference, if you will, the way economic success bites back at the hand that feeds it. It is supposed to be a symptom of the ebb and flow of commerce, rising when demand is high...

Brazil's 2010 trade balance 'lowest in 8 years'
Brazil's 2010 trade balance slipped nearly 20 percent to its Lowest Level in eight years as surging imports caught up to record exports, industry and trade ministry figures released Monday showed. The data confirmed Brazil's troubles with a strengthening currency, the real, which was making foreign goods and machinery cheaper to buy while undermining the competitivity of its exported products. The trade surplus -- the difference between exports and imports -- was 20.3 billion US dollars, a figur...

A New Year, new economic headwinds
Most analysts are looking forward to a strengthening Economic Recovery in 2011, but slowing growth and rising Inflation around the globe suggest the opposite will prove true. For the Stock Market, 2010 was a solid year by many standards. Despite some unfettered Volatility, most major U.S. stock markets ended the year comfortably in the positive. Leading the way were small cap stocks with the Russell 2000 up more than 26%. While the broader market trailed the small cap index, the S&P 500, of...

6 Predictions About How The Economy Will Affect Average Americans In 2011
We all remember the worst of 2010: high Unemployment, an ongoing Foreclosure crisis and megabanks that behaved, well, a lot like you'd expect. To figure out just how The Economy would shape our lives in 2011, we asked 6 Economists and analysts to cut to the chase and give us their predictions. Instead of the focusing on the market, or the latest intrigue in Corporate America we decided to ask our experts a simple question: how will the Average American be affected by The Economy in the 12 mon...

Tax-Exempt Bonds for Beginners
Felix Salmon linked to an article by David Kotok on Build America Bonds (BAB), which reminded me that I’ve been meaning to write about them (now that they no longer exist). BAB were introduced in the 2009 stimulus bill. If a state or Local Government issues BAB, the Federal Government pays 35 percent of the interest on the bonds; the bondholder pays tax on all the interest, as usual for corporate bonds — but not for traditional state or Local Government bonds (“munis”). B...