James Kochan News
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History is repeating itself in the bond market as investors capitulate on bets that the Federal Reserve’s money-printing efforts will spark faster inflation.
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Central banks across five continents are undertaking the broadest reduction in borrowing costs since 2009 to avert a global economic slump stemming from Europe’s sovereign-debt turmoil.
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Barely a year ago, the municipal bond market was tarred as a horrible investment. The expiring taxable Build America Bonds program had triggered an uptick in new issues that created a supply glut, bond rates were on the rise and analyst Meredith Whitney told "60 Minutes" that defaults would amount to "hundreds of billions of dollars." From October 2010 through January 2011, municipal bond funds saw net outflows of more than $33 billion, while a benchmark municipal bond index fell nearly 5 percent.
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Sales of U.S. corporate bonds rose for the second straight week, the first back-to-back gain in three months, as borrowers took advantage of tightening relative yields.
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The risk of owning U.S. government debt is as great as any time since the 1950s with yields at the year’s lows and Treasury Secretary Timothy F. Geithner locking in borrowing costs by selling longer-term securities.
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Sales of company bonds in the U.S. soared to the fastest pace since March this week, five times quicker than global issuance, as cash-flush investors push yields to record lows.
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Two years after suffering $213.2 billion of losses when debt markets froze, investors in junk bonds are accepting what Moody’s Investors Service calls the weakest creditor protections since 2007.
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Swift Holdings Corp. , the largest truckload carrier in North America, plans to sell debt through its Swift Services Holdings Inc. unit as issuance of corporate bonds revives.
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Bank of America Corp. , JPMorgan Chase & Co. and HSBC Holdings Plc raised $7.65 billion in the bond market as investors grow more confident Europe’s debt crisis will be contained, averting another credit freeze for lenders.
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Goldman Sachs Group Inc. and Morgan Stanley led $14.2 billion in U.S. corporate bond sales in the busiest day in almost four months as yields on company debt fell to the lowest in six years.
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