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Two Ways to Play: Corporate Bonds Are Booming


Strengthen your portfolio in good times and bad.

Corporate Bonds Are Hot

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!
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No positions in stocks mentioned.

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