Guest post by Peter Tchir.
There was some chatter about the performance of fixed income ETF’s yesterday. They performed poorly at least relative to stocks and some had a late day sell-off fueling some speculation that credit wasn’t doing well.
That speculation was just wrong, but highlighted so,e problems with existing fixed income ETF’s.
They were trading at a premium and that premium tends to disappear when bonds become easy to source. While HY bonds remained well bid, the investment grade bond market is being flooded with new issues – primarily to enable large one time dividends. Might be worth probing into these companies a little deeper, but that is for another day.
So premium versus bond availability explains some of the noise, but to a large degree that is secondary.
Guest post by Sober Look.
The ISI Group combined four US regional Fed indices with Markit Manufacturing PMI to create a comprehensive US manufacturing index (chart below). A pattern of growth starts followed by fairly sharp corrections emerges. Some have speculated that this volatility, at least in part, can be explained by the Eurozone uncertainty flare-ups: Greece (2010), Italy (2011), Spain (2012). The pattern also exists in the economic surprise indices (see post-1 and post-2).