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Thursday, December 2, 2010

If Muni Bonds Had a Terrible Month in November...How Would One Describe the Month for International Bonds

The Financial Times reports on November in municipal bonds.:

Munis see worst falls since Lehman collapse
By Nicole Bullock and Michael Mackenzie in New York
Published: November 30 2010 18:34 | Last updated: November 30 2010 18:34
US municipal bond markets have suffered their worst month since the collapse of Lehman Brothers, amid rising interest rates, a flood of new issuance and fears over possible defaults by cash-strapped states and cities.
The Barclays Capital municipal bond index was on track on Tuesday for a fall of 2.2 per cent in November, the biggest monthly loss since September of 2008, when Lehman Brothers went bankrupt and the index dropped 4.7 per cent.
The poor performance was driven, in part, by higher Treasury yields as US government debt prices fell for the second month in a row during November. The total return for US Treasuries was -0.87 per cent for the month according to Barclays Capital and the yield on 10-year notes was set to close out the month at 2.77 per cent, up from 2.60 per cent at the end of October.
Other asset classes also dipped last month, with US corporate and mortgage bonds lower.
But as I have mentioned in an earlier post the losses investors are facing in another "hot" asset class: international bonds particularly those of developed countries. Here are returns for the month of november for bond etfs:
MUB muni bonds, IGOV developed market intl, WIP developed markets inflation protected, EMLC emerging markets, and PICB international corporate bonds. The losses in all of the developed market categories are far in excess of those losses in munis.

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