What we’re reading (7/16)
“Bond King Jeff Gundlach Says There Is A Simple Reason Treasury Yields Are So Low Even As Inflation Surges” (MarketWatch). “Bond guru Jeffrey Gundlach of DoubleLine Capital said it is no mystery why U.S. Treasury yields are anchored lower despite evidence that inflation is rising in an economy attempting to rebound from a stultifying pandemic. Speaking to CNBC’s Halftime Report on Thursday, Gundlach said that the financial system remains awash with liquidity, i.e., willing buyers, who seem eager to purchase benchmark government debt, a factor that has been a key reason in driving prices up and yields commensurately lower. ‘Yields are this low because of all the liquidity in the system,’ Gundlach told the business network.”
“Homeowners Have Another Chance To Refinance As Mortgage Rates Fall Again” (CNN Business). “Homeowners who missed out on ultra-low interest rates earlier this year may have another chance. The average interest rate on a 30-year fixed-rate mortgage fell to 2.88%, according to Freddie Mac, the lowest level since mid-February and the third consecutive weekly drop. The 15-year fixed-rate mortgage dropped to 2.22%.”
“Wall Street Opens Back Up To Oil And Gas—But Not For Drilling” (Wall Street Journal). “Energy companies are raising money again from Wall Street at superlow borrowing costs, thanks in part to higher oil prices. The one thing most investors don’t want them to do with it is pump more crude. Speculative-grade energy companies, including oil producers, pipeline operators and refineries, have issued bonds in the U.S. at a record pace this year, raising about $34 billion so far, according to LCD, a unit of S&P Global Market Intelligence. Cash is primarily heading toward riskier borrowers in the shale patch, which by this time last year had raised about half as much from bond issuances.”
“Why Investors Are Worried About A Profits Squeeze In 2022” (The Economist). “Optimism about earnings has driven share prices higher in the past year. But financial markets are relentlessly forward-looking. And with bumper earnings already in the bag, they now have less to look forward to. A rally in bond prices since March and a sell-off in some cyclical stocks point to concerns about slower gdp growth. A plausible case can be made that the earnings outlook might worsen as quickly as it improved.”
“Small Hedge Fund Managers Are Feeling Optimistic As Launches Surge And Investors Seek Alternatives To The Industry's Biggest Names” (Business Insider). “Macro managers, stock-pickers, and distress players all were able to make money last year. And those who invest in hedge funds took notice. Starting in July 2020, there have been three consecutive quarters where more funds were launched than were liquidated — an impressive stat since fundraising meetings and conferences ground to a halt during the throes of the pandemic.”
