PIMCO: Fed to engage again in Treasury buys | Reuters

PIMCO: Fed to "engage again" in Treasury buys

The rapid rise in bond yields will force the Federal Reserve to "engage again" in the purchases of U.S. Treasuries and mortgage-backed securities, Mohamed El-Erian, the chief executive of bond giant Pacific Investment Management Co., said Friday.

The surge in Treasury yields is lifting mortgage rates, threatening to dampen home demand and kill off the refinancing boom that is bolstering the health of some households.

"What mistake can the U.S. economy afford to make? If you look at it that way, I suspect that we will see the Fed engage again in these markets," El-Erian, who oversees $756 billion at PIMCO, told Reuters Financial Television.

Debate is brewing within the Federal Reserve over whether it should ramp up its purchases of Treasuries and mortgage-backed securities to keep a lid on interest rates, or scale them back to avoid an outbreak of inflation.

Massive buying of securities by the U.S. central bank has doubled the size of its balance sheet to around $2 trillion as it flooded the economy with money to prevent a severe recession getting worse.

The Fed's Open Market Committee voted unanimously in April to keep unchanged its targets for purchases of MBS and long-term Treasuries. But the panel left the door open to increasing purchases at future meetings if needed to secure a stronger recovery, according to minutes of the meeting. The FOMC next meets on June 23-24 in Washington.

DOLLAR, JUNK BONDS VULNERABLE

Investors' fears in the United States and abroad are rising about the health of America's economy, owing to its need to borrow for stimulus programs. That will keep the U.S. dollar under pressure, El-Erian said. "We could be embarking on a multiyear process of erosion, at the margin, of the global standing of the U.S."

The United States faces competition also from Brazil, Russia, India and China, which account for 15 percent of the $60.7 trillion global economy. El-Erian said the so-called BRIC nations, which are meeting next week for their first formal summit, are increasingly pressing the case for "a larger role on the global stage, as they should."

High-yield "junk bonds" and equities are also vulnerable, El-Erian added. As an example, the roughly 40 percent rise in the Standard & Poor's 500 index since early March has been "excessive" and not supported by economic fundamentals, he said. "The last part of the rally in a lot of risk assets ... was exaggerated" by hedge funds and fund managers chasing performance, he added.

El-Erian said PIMCO has been a buyer of high-quality corporate bonds and short-maturing government bonds in the United States and abroad, arguing economies still face major headwinds including a fragile labor market. He expects the unemployment rate in the United States to reach between 10 percent and 10 1/2 percent.

"Over the immediate next few weeks, we think Treasuries at this point had oversold, particularly front end of curves around the world had oversold," El-Erian said. "We do not believe the Fed, European Central Bank or the Bank of England will be hiking rates any time soon. We have found value in the front end of the curve."

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Pum!

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no estropees el post con fotos que no vienen al caso

Esos son muchos Bonos.

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¿Adiós a la última esperanza para los bonos?

Más allá del debate sobre si son reales o no los "brotes verdes" que ayer recogía el comunicado posterior a la reunión de la Reserva Federal, la atención de los mercados se centra ahora mismo en la deuda pública.

A juicio de bastantes analistas, Bernanke acabó ayer con la última esperanza para los alcistas en este mercado al no ampliar el programa de compra de bonos emprendido en los últimos meses.

Con todo lo demás en contra -emisiones masivas de nuevo papel, vuelta de las expectativas inflacionistas, previsiones de subida de tipos a fin de año-, parece inevitable que la tendencia bajista actual -que se ha frenado en niveles de precio de 113 para el bono a 10 años norteamericano- se retome y continúe durante bastante tiempo.

"Si la Fed no va a aumentar la cantidad destinada a comprar bonos del Tesoro respecto a los 300.000 millones iniciales, se quedará sin dinero para estas compras a principios de agosto. Esta es la clave: la Fed sólo puede reducir a partir de ahora las compras de bonos para estirarlas hasta septiembre o no habrá ninguna oferta más a partir de agosto. En cualquiera de los casos, las rentabilidades subirán", resume la situación Ajay Rajadhyaksha, jefe de renta fija de EEUU en Barclays.

Chris Bury, de Jefferies & Co., añade que "al no haber cambios en las declaraciones de la Fed, el mercado vuelve a fijarse en el lado de la oferta: más emisiones del Gobierno en las próximas dos semanas".

En efecto, como hemos explicado en Bolságora desde febrero, cuando nadie hablaba de ello todavía, uno de los grandes debates que se libran sobre el futuro de los mercados es el de los bonos. Un debate que enfrenta a unos alcistas apoyados en las medidas de la Fed (los tipos cero, la liquidez ilimitada y los 300.000 millones para comprar bonos), en las fuerzas deflacionistas y en la búsqueda de refugio por un dinero asustado, contra unos bajistas que se basan en las emisiones de deuda masivas y en las expectativas de recuperación económica (y de la consiguiente vuelta de la inflación).

Los bajistas ganan la partida

Como es fácil de comprobar, los alcistas (en precio) se han ido quedando sin argumentos. La recuperación de la bolsa ha provocado el movimiento contrario del que preveían, es decir, el dinero ha salido de la renta fija hacia la variable. La deflación parece definitivamente descartada gracias principalmente a las enormes medidas de estímulo adoptadas por la Fed y el Gobierno. Y ahora se quedan sin su última esperanza, la continuidad de las compras de bonos por parte del banco central.

Mientras tanto, las razones de los bajistas cobran todavía más vigencia si cabe a la vista de las enormes emisiones que está lanzando el Gobierno de EEUU (y los europeos) y que tiene que continuar colocando para financiar todos estos planes de estímulo. Y si los "brotes verdes" se confirman, cosa que está por ver, la recuperación económica que descuenta la bolsa será una realidad y con ella, las subidas de tipos. Los Fed Funds ya descuentan una subida antes de fin de año.

Guy LeBas, estratega jefe de renta fija en Janney Montgomery Scott, resume así la situación de los bonos: "si el trabajo de la Fed es llevarse el ponche justo cuando la fiesta se pone interesante, es obvio que ya no habrá más ponche, y algunos podrán decir que la ponchera estaba rebosando de liquidez, pero la fiesta está muy lejos de ponerse interesante".

¿Adiós a la última esperanza para los bonos? - 1356504 - 25/06/09 - elEconomista.es - elEconomista.es

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Morgan Stanley issues alert on corporate bonds after explosive rally

Corporate bonds have seen the most explosive rally in nearly a hundred years since the markets touched bottom last winter, but, according to a report by Morgan Stanley, they look increasing vulnerable as they pull far ahead of equities.

Andrew Sheet, the bank's European credit strategist, has advised clients to beware signs of creeping angst in the credit options markets, where volatility has been flashing an early warning signal for some weeks.

"The pace of the recent rally has, for the first time, begun to show signs of over-extension," he said.

The September option contracts have seen a "sustained rise in implied volatility" yet the interest spreads on corporate bonds have continued to drop sharply. Bond investors ignore this sort of divergence at their peril.

Morgan Stanley said none of the previous bond recoveries going back to 1925 had been as dramatic as this. "Historically, credit rallies are generally fast and fierce, but this has been even faster. Levels are almost back to where they were in the first quarter of 2008, but equities are still a long way off that," said Mr Sheet.

Analysts say the current dividend yield on the German utility RWE is 7.7pc while the interest return on a five-year bond issued by RWE is 3.2pc, and the credit default swaps have dropped to just 50 basis points.

These markets are clearly out of alignment. They appear to be reflecting an assumption of a prolonged 'bond-friendly' form of gentle deflation, which is at odds with assumptions in the rest of the market.

The credit euphoria undoubtedly reflects the emergency measures by governments around the world to stabilize the financial system, but the wash of liquidity should be an equally good tonic for stock markets. Credit rallies usually anticipate stocks by about 3 months, but we are well past that stage of the cycle. The two should be converging by now.

Either stock markets will have to rise sharply to close the gap - an outcome in doubt after poor confidence date in the US and jitters in the Shanghai markets as the Chinese authorities restrain lending - or credit spreads must start to widen again to reflect the risk.

Spreads on non-financial grade BBB-rate bonds in Europe have dropped backed to the long-term average of around 200 basis points above benchmark government bonds, a fall from over 548 earlier this year. This may prove "rich" given the spate of defaults expected by the rating agencies over the next two years.

It has taken just eight months for spreads to recover fully in this rally. It typically takes almost three years, and sometimes much longer. The credit markets seem to be telling us that the Great Recession of 2008-2009 was much ado about nothing.

Morgan Stanley issues alert on corporate bonds after explosive rally - Telegraph

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