Best of the Bond Market for June 18th, 2012

Marketwatch:Fed likely to Twist Again

The Federal Reserve is likely to extend its Operation Twist program at the end of its two-day meeting on Wednesday, a growing number of Fed watchers said over the weekend.

ETF Trends:Bond and Stock ETFs Playing Chicken

In other words, Treasury bonds are loudly signaling investor fears over deflation and the Eurozone debt crisis spiraling out of control. Meanwhile, stock ETFs aren’t mirroring the same level of anxiety. Both can’t be right. Prime Economics: The Grand Bond Canyon – In today’s post Greek election on-line Financial Times we learn that, far from bond markets celebrating the Greek election results by lowering rates, Spanish and Italian yields continue to soar upwards.

Bloomberg: Biggest Bond Traders See Worst Over For Treasuries

As the U.S. recovery slows and Federal Reserve efforts to boost growth expire, there’s no consensus among the biggest bond dealers that the central bank will begin a fourth round of economic stimulus with consumer and corporate borrowing costs already at record lows.

ETF Strategy:Yields, downside protection and fundamentals support case for high-yield corporate bond ETFs

Yields on high-yield corporate bonds currently far exceed those of US Treasuries, UK gilts or German bunds, issuances which Rodilosso says “are not immune to declining values in their own rights.” On downside protection, Rodilosso says that equities have had their yields pushed lower recently and have exhibited greater sensitivity than high-yield credit markets to downward moves in the economy.

Bloomberg: Junk Bond ETF’s Signal Demand for Electronic Bond Trading

Trading of exchange-traded funds that focus on junk bonds is soaring while volume in the underlying securities slumps as dwindling dealer holdings prompt investors to seek electronic platforms. Volumes in the two biggest ETFs in June have climbed 22 percent above the six-month average while overall trading for the debt has …