Bond markets

1) Fundamental information about bond market

- the bond market (also known as the credit , or fixed income market ) is a

financial market where participants can issue new debt, known as the primary

market, or buy and sell debt securities, known as the Secondary market, usually

in the form of bonds

-the primary goal of the bond market is to provide a mechanism for long term

funding of public and private expenditures.

- traditionally, the bond market was largely dominated by the United States

1) Fundamental information

• references to the "bond market" usually refer to the government bond market,

because of i ts size, l iquidity, relative lack of credit risk and, therefore,

sensitivity to interest rates

• because of the inverse relationship between bond valuation and interest rates,

the bond market is often used to indicate changes in interest rates or the

shape of the yield curve.

• the yield curve is the measure of "cost of funding"

2) Types of bond markets

• The Securities Industry and Financial Markets Association (SIFMA)

classifies the broader bond market into five specific bond markets

• Corporate

• Government & agency

• Municipal

• Mortgage backed, asset backed, and collateralized debt obligation

• Funding

3) Corporate bond market

• How hot is the corporate bond market?

• analysts at UBS show sales have topped last year's totals already, more super-

sized sales are getting done and more investors line up for every dollar of

corporate debt sold

• here are three metrics showing just how much investors seem to want to be in

corporate bonds

• 1. sales of bonds by financial companies have surpassed the total sold in

2011, according to UBS analysts. Sales of other kinds of corporate bonds

(like industrials) are already $142 billion ahead of last year ’s pace, the firm

wrote in a note Tuesday

3) Corporate bond market

• 2. more than 47 sales of more than $3 bill ion have occurred this year – close

to last year ’s total of 51 deals. Jumbo sized deals have become commonplace,

as a market flush with cash doesn’t even think twice about deals greater than

$3 bill ion in size

• 3. more investors are lining up for every bond deal – averaging 3.8 times the

amount of corporate debt sold, UBS said. Last year, the average was 2.4

times.

4) Government bond market

• We are on the road to serfdom

• we are now five years into the Great Fiat Money Endgame and our freedom is

increasingly under attack from the state, l iberty’s eternal enemy

• war is the health of the state, and so is financial crisis, ironically even a

crisis in government finances

• a free society requires hard and apolitical money

• with free and unlimited fiat money at the core of the financial industry, mis-

allocations of capital will not diminish but increase

5) Municipal bond market

• Bank-Friendly Regulator Shifts to Revamp Reputation

• curry has also raised the profile of consumer protection and shifted focus

toward “operational risk” - the idea that bank practices and management can

pose as much of a threat to safety and soundness as external forces

• curry arrived at the OCC in March after eight years on the board of the

Federal Deposit Insurance Corp., a bank regulator with a different history

and mission. The FDIC, founded during the Great Depression, was created to

protect depositors from bank runs and other threats. The OCC, on the other

hand, was established during the Civil War to create a uniform currency and a

system of national banks

6) Mortgage backed bond market

• mortgage-Bond Investors Seek 'Replicat ion ' Trades as Fed Buys

• mortgage-backed securi t ies investors considering their next best t rades as they watch

the Federal Reserve consume their market are s t icking pret ty close to home

• Falling yield spreads haven't sparked a flight from MBS, which are expected to

benefit from Fed support. But some investors have begun testing the waters in

other markets, attempting to closely match the MBS characteristics in what

analysts call "mortgage replication.„

• hurdles to mortgage refinancing mean that principal prepayments on MBS will

be relatively moderate

7) Funding bond market

• Barclays Prepares First U.S. Card ABS Deal in Bid to Grow Funding

• Barclays PLC is preparing its first bond deal backed by U.S. credit-card

loans as it aims to grow lending and lower its funding costs in the U.S.

market

• the British bank wants to claim a bigger share of the U.S. credit-card market,

where it has grown to be a mid-sized player since entering the business in

2004

• the British bank wants to claim a bigger share of the U.S. credit-card market,

where it has grown to be a mid-sized player since entering the business in

2004