Until about four months ago, JKMilne Asset Management invested at least half the money in its global fund outside the U.S. No more. With Europe’s debt crisis intensifying, the Fort Myers, Florida-based firm with $1.8 billion under management has all its money in dollars.
Standard & Poor’s is giving a higher rating to securities backed by subprime home loans, the same type of investments that led to the worst financial crisis since the Great Depression, than it assigns the U.S. government.
Investors are buying longer-maturity corporate bonds at the fastest pace in more than three months, speculating that declining inflation expectations will keep the Federal Reserve from raising interest rates.
Stocks and Treasuries are moving in tandem twice as often as they normally do, a sign investors are growing convinced the U.S. will lose its AAA credit rating and that an impasse among lawmakers may spur losses in both markets.
Level Global Investors LP co-founder Anthony Chiasson, who faces trial Oct. 29 for insider trading of two technology companies, asked to present jurors with an analysis he said shows the hedge fund’s other co-founder, David Ganek, made trades in the same stocks at the same time.
The risk of owning Europe’s corporate bonds is the highest on record relative to U.S. company debt as investors lose confidence lawmakers and central bankers can tame the region’s worsening fiscal crisis.
The cost of protecting bonds from default in the U.S. fell for a 10th straight trading day, the longest streak since October 2006, as the Federal Reserve kept its plan to buy $600 billion of Treasuries through June.
Credit ratings are becoming irrelevant in a bond market where investors still perceive AAA companies from Johnson & Johnson to Microsoft Corp. to be a higher risk than recently downgraded U.S. Treasuries.