Two Ways to Play: Corporate Bonds Are Booming
Strengthen your portfolio in good times and bad.
The credit markets are on fire. Corporate bonds are providing some of the best returns in more than a decade according to Bloomberg.
The Bank of America Merrill Lynch Global Broad Market Corporate Index returned 1.02% since New Years Eve, the best start since 1998.
Companies are rushing to get financing done now in anticipation of higher rates later in the year. Just yesterday, PepsiCo (PEP) sold $4.25 billion of securities to finance its acquisition of two bottlers. The sale by the world's second-largest soft-drink maker consisted of 18-month, 5-year, 10-year, and 30-year bonds.
Further helping the credit markets, Moody's Investor Services said yesterday corporate default rates fell in the fourth quarter, marking the first drop in two years.
From the Bull Pen: As long as the hot money continues to flow, the bulls will have the benefit of the doubt. Consider the ultra basic materials ETF (UYM). A pull back to $33 could be a buying opportunity. If and when.
From the Bear Cave: Bears can consider taking advantage of the rotation out of the tech sector. Google (GOOG) failing at its 20-DMA ($610) could be an opportunity. But remember, shorting is always a riskier strategy so a buy stop can be set above that level.
For more ways to play and other trading ideas from more than 30 top market pros, take a free trial to our Buzz & Banter.
A Quick Check Around the World
Asian trading closed with the Nikkei 0.75%, India -0.59%, Hang Seng 0.38%, Shanghai 1.91%, and Taiwan -0.17%.
Across the pond, we see the FTSE -1.27%, CAC -1.03%, DAX -1.25%
As of 8:00 AM EST, S&P Futures are trading -7.50 to 1135.00. Nasdaq futures are -12.25 to 1871.25.
A Look at Commodities
Over in commodities, crude oil is -1.15 to 81.36 while gold is -2.800 to 1148.60 this morning. Silver is -0.210 to 18.465 and copper -0.0515 to 3.3900.
The dollar Index is -0.0250 to 77.1350.
On the Radar
08:30 Trade Balance -34.8B
Click here for the full trading radar.
Good luck and have a great day!
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter