Bond Market information

Take the good with the bad.

A conversation on CNBC (here), actually uses the word “convexity” in the context of mortgage backed  securities.  We talked about using futures to adjust maturities the other day and I mentioned that duration was the better measure. The second derivative of duration is convexity. Ask and you shall receive more.

While that clip may have revealed more than the average watcher wants to know, I am not sure what this one does. A 5th grader (here), wins some SIFMA stock-picking contest.  You all know, I cannot stop talking about my daughter, now in 5th grade, who I am taking to her first concert today (band called R5, place called the Epicenter in Mira Mesa),  But stock opinions ?

More reading.

1. In his December outlook (here), Bill Gross at PIMCO talks about riding down the yield curve, rolling over 2-10 year maturities to pick up an extra 1% capital gain (in addition to the coupon income) as a strategy for investors in a world of permanently upsloped yield curves and central bank policies that will keep short-term rates low.  This was something we did in class Thursday.

2. Ken Rogoff at Project Syndicate on the sustainability of capitalism (here)

3. A nice factual policy piece (here) on tackling the US debt crisis.Read the piece by Andrew Reschovsky.  It is not just Europe, you know.

3. Of the top 50 best performing stocks year-to-date, 20 are in Health care (here).

Bloomberg reports that 5-year TIPS yields turn negative

The choice lines from the Bloomberg story are below. These are interesting times.

….The five-year inflation-protected note yield dropped 3 basis points, or 0.03 percentage point, to negative 0.07 percent at 3:12 p.m. in New York, according to BGCantor Market Data. The price of the 0.5 percent security maturing in April 2015 gained 1/8, or $1.25 per $1,000 face amount, to 102 19/32.

…..Yields on inflation-indexed Treasuries maturing in July 2012 have been negative since July 20 as yields on conventional two-year Treasuries dropped to record lows well below the annual rate of inflation.