From SocGen’s Andrew Lapthorne and quant team: in the first quarter of 2013, buybacks done to offset the dilution from executive stock options maturing reached near a post crisis high and ticked past the amount of buybacks done to reduce the overall share count — you know, those done to benefit the shareholders:
JP Morgan’s always interesting Flows & Liquidity team have weighed in on the great Japanese yield panic. Japanese government bond yields have jumped since the Bank of Japan launched QE on steroids at the start of April and volatility has risen with them — the 60-day standard deviation of the daily changes in the 10 year JGB yield jumping to 4bp per day, the highest since 2008 (that’s longer term yields on the right for a bit of context):
That has understandably scared people who remember the volatility-induced selloff shock of 2003. From JPM: Read more
Gary Jenkins from Swordfish Research is having a moment; but it’s an interesting moment. On Monday he wrote:
“A while back I said that everything was now a credit and at the time that seemed a fair appraisal of the situation… However the market moves quickly and it is probably fair to say that right now everything is a rate product.*”
(The Co-Op bank, he says in the footnote, being the exception that proves the rule.) Read more
An upgrade in this environment is apparently stupidly effective. Here’s Greece’s 10-year bond yield tumbling a full one per cent the day after Fitch upgraded it to to B- from CCC, and said the outlook was stable:
This Fobor based paragraph is from a Bank of America Merrill Lynch note published earlier in the month which the FT’s Robin Wigglesworth brought to our attention:
In a world of zero rates, where $19.4 trillion of government bonds (that’s 48% of the total market) is trading below 1%, it’s little wonder the “lust for yield” is as strong as it is.
Behold — an illustrative chart from Morgan Stanley’s global economics team (click to enlarge):
Here’s Deutsche’s Jim Reid on junk bonds — where both defaults and yields are now far lower than they were in the 1980s — in Thursday’s Authur’s note:
We’re going to need a new name for junk bonds. They’re yielding less than 5 per cent for the first time ever (h/t to our own Tracy Alloway):
The 5% yield barrier has proved no match for this Federal Reserve-fueled junk-bond market, which last night reached yet another all-time record-low average yield-to-worst of 4.97%, according to the Barclays US High Yield Index. It marked a new level of market capitulation to central-bank forces as it’s the first time the index has dipped below 5% in its 30-year history (before January the market had never even fallen below 6%). The average price of 107.31 cents on the dollar also marks a record high.