Asian investors are already rotating into equities, as
local bond yields have dropped to new lows under the stampede of a yield - hungry horde.
The small net change in
local bond yields since February is consistent with developments in the US over the same period.
Not exact matches
It puts 25 % into foreign stocks, 25 % into U.S. Treasuries, and 10 % each into commodities, emerging - market currency, bank loans, high -
yield bonds, and 5 % each into TIPS and
local - currency emerging - market debt.
debt obligations of the U.S. government that are issued at various intervals and with various maturities; revenue from these
bonds is used to raise capital and / or refund outstanding debt; since Treasury securities are backed by the full faith and credit of the U.S. government, they are generally considered to be free from credit risk and thus typically carry lower
yields than other securities; the interest paid by Treasuries is exempt from state and
local tax, but is subject to federal taxes and may be subject to the federal Alternative Minimum Tax (AMT); U.S. Treasury securities include Treasury bills, Treasury notes, Treasury
bonds, zero - coupon
bonds, Treasury Inflation Protected Securities (TIPS), and Treasury Auctions
Prices on the government's benchmark
bonds due 2033 climbed to 117.6 cents on the dollar while
yields on
local - law
bonds due 2017 declined to 6.38 percent.
Higher -
yielding risk assets such as
local emerging market (EM)
bonds look relatively attractive.
Finally, we prefer hard - currency EM
bonds — particularly high -
yielding oil exporters such as Russia, Colombia and Kazakhstan — and short - duration
local currency
bonds in some countries.
Yet the currency is likely to remain weak as zero - anchored Japanese 10 - year
bond yields encourage
local investors to buy higher -
yielding foreign
bonds.
Australia's central bank signaled today it may resume cutting interest rates as soon as next month if weaker - than - forecast growth slows inflation, sending the
local currency and
bond yields lower.
In the EM
local currency
bond space, Colombia (10 - year
yield -37 bp), South Africa -LRB--18 bp), and Ukraine -LRB--17 bp) have outperformed this week, while the Philippines (10 - year
yield +27), Brazil (+20 bp), and Mexico (+4 bp) have underperformed.
There was some interest to buy MYR ahead of USD 3.92 by
locals but continues to be overshadowed by the unwinding of foreign
bond inventories, but this was more so prevalent when the UST 10
yield was above 3 %.
Currency impact can be managed by hedging
local currencies back into U.S. dollar, allowing investors to potentially earn
local market
yields and take advantage of potential
local bond price appreciation, with less currency fluctuations.
Ghana scooped all $ 221.4 million tendered for a three - year domestic dollar
bond at a 6.25 percent
yield on Thursday, boosting the government's plans to explore
local funding sources, arrangers said.
Other investors may want to consider the iShares Emerging Markets
Local Currency
Bond ETF (LEMB), iShares Emerging Markets Corporate
Bond ETF (CEMB), or iShares Emerging Markets High
Yield Bond ETF (EMHY).
The third approach is to ignore government
bond rates in the
local currency entirely, either because you believe that they are not liquid enough to
yield reliable numbers or because they contain default risk.
Japan is the largest accessible
bond market in Asia (source: Barclays Multiverse Index as of 7/29/16), but the problem is the
yields for many
local bonds are negative.
Exhibit 1 lists the
yield - to - worst of the ten
local currency
bond markets tracked by the S&P Pan Asia Bond In
bond markets tracked by the S&P Pan Asia
Bond In
Bond Index.
Emerging market sovereign
bonds that are issued in
local currencies are supported by high real
yields and improving credit quality.
Seeks to provide an exposure to high
yield municipal
bonds issued by U.S. states, the District of Columbia, U.S. territories and
local governments or agencies
The S&P Municipal
Yield Index is designed to measure the performance of high yield municipal bonds issued by U.S. states, The District of Columbia, U.S. territories and local governments or agencies, such that interest on the securities is exempt from regular federal income tax, but may be subject to the alternative minimum tax and to state and local income t
Yield Index is designed to measure the performance of high
yield municipal bonds issued by U.S. states, The District of Columbia, U.S. territories and local governments or agencies, such that interest on the securities is exempt from regular federal income tax, but may be subject to the alternative minimum tax and to state and local income t
yield municipal
bonds issued by U.S. states, The District of Columbia, U.S. territories and
local governments or agencies, such that interest on the securities is exempt from regular federal income tax, but may be subject to the alternative minimum tax and to state and
local income taxes.
Class A shares with sales charges performance reflects the maximum 5.5 % sales charge, with the following exceptions: Class A shares of Hartford Emerging Markets
Local Debt, Hartford High
Yield, Hartford Inflation Plus, Hartford Municipal Opportunities, Hartford Municipal Real Return, Hartford Strategic Income, Hartford Total Return
Bond, Hartford World
Bond, Hartford Schroders Emerging Markets Debt and Currency, Hartford Schroders Tax - Aware
Bond, Hartford Schroders Emerging Markets Multi-Sector
Bond and Hartford Schroders Global Strategic
Bond reflect a maximum 4.5 % sales charge; Class A shares of Hartford Floating Rate and Hartford Floating Rate High Income reflect a maximum 3.0 % sales charge; Class A shares of Hartford Short Duration reflect a maximum 2.0 % sales charge.
Private sector
bonds have a higher level of risk compared to government (federal, state, or
local)
bonds, but they do have better
yields.
Global
bonds can offer different
yields and prices than U.S.
bonds, depending on
local interest rates and economic conditions.
Exhibit 3 shows the
yield for 5 - and 10 - year nominal
bonds went down 30 bps and 54 bps, respectively, but we can see positive returns in the
local indices.
According to the Exploring Emerging Markets Debt article in the Journal of Indexes, most of the emerging market USD sovereign
bond yields are influenced by the changes in the U.S. Treasury curve more than the
local emerging market factors.
The iShares J.P. Morgan EM
Local Currency
Bond ETF provides exposure to bond issues across several emerging markets — a riskier proposition on its face than investing in developed countries with better credit ratings, which helps explain the high yi
Bond ETF provides exposure to
bond issues across several emerging markets — a riskier proposition on its face than investing in developed countries with better credit ratings, which helps explain the high yi
bond issues across several emerging markets — a riskier proposition on its face than investing in developed countries with better credit ratings, which helps explain the high
yield.
The fiscal problems of state and
local governments are well known, and the parlous state of municipal budgets has led to very high
yield spreads on all tax - exempt
bonds.
Long - term N.Y / N.J. Port Authority
bonds currently
yield close to 5 %, and they are free of both federal and state and
local taxes in the states in which they operate.
«U.S. real - estate developers are joining the largest wave of
local debt issuance on the Tel Aviv Stock Exchange
bond trading platform since 2007, capitalizing on
yield - starved investors to obtain financing.»