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<keyword id="21354159" type="General" weightage="100" keywordseo="Indian-government-bonds" source="keywords">Indian Government Bonds</keyword> are set to be included in the JP Morgan Government Bond Index, <keyword id="20036608" type="General" weightage="20" keywordseo="Emerging-Market" source="keywords">Emerging Market</keyword> (GBI-EM) from June 28. The inclusion will take place over a period of 10 months starting June 28, 2024, through to March 31, 2025.<br /><br />India will have a 1% weightage in the <keyword id="19967624" type="General" weightage="20" keywordseo="JPMorgan" source="keywords">JPMorgan</keyword> Emerging Market (EM) Bond index, which will gradually rise to 10% over a 10-month period, at an inclusion rate of about 1% weight per month. The inclusion is estimated to bring $20-25 billion of inflows into the Indian bond market. However, India's index-eligible bonds have already attracted $10 billion since the inclusion was announced in September last year.<br /><br />On September 21, 2023, Global index provider JPMorgan announced that it would include Indian government's bonds in its emerging market indices.<br /><br />Only Indian government bonds issued by the Reserve Bank of India (<keyword id="19899808" type="General" weightage="20" keywordseo="RBI" source="keywords">RBI</keyword>) under the <keyword id="12313402" type="General" weightage="20" keywordseo="Fully-Accessible-Route" source="Orion">Fully Accessible Route</keyword> (FAR) will be included in the indices. All FAR-designated IGBs maturing after December 31, 2026, will be eligible to be included in the JPMorgan Emerging Market (EM) Bond index. In the post-monetary policy press conference on June 7, RBI Governor <keyword id="6359111" type="General" weightage="20" keywordseo="Shaktikanta-Das" source="Orion">Shaktikanta Das</keyword> said the central bank is not worried about the big <keyword id="20072947" type="General" weightage="20" keywordseo="foreign-fund-inflows" source="keywords">foreign fund inflows</keyword> from global bond inclusion.<br /><br />"The RBI has a number of instrumentalities to manage the flows. We have managed it in the past and we will manage it in future also. No worries on that," Das said.<br /><br />Experts believe the index inclusion-related heavy flows is likely to boost demand for Indian government securities in the current fiscal, once short-term liquidity issues in certain papers get sorted. Vishal Gupta, Co-founder of IndiaBonds.com says the inclusion of Indian government bonds in JP Morgan Index is a watershed moment for the <keyword id="22201110" type="General" weightage="20" keywordseo="fixed-income-markets" source="keywords">fixed-income markets</keyword> in India.<br /><br />"This compulsorily puts Indian bond markets on the radar of global bond investors and although initial investments are supposed to be to the tune of $25-30 billion, index inclusion paves the way for this number to keep growing in the next few years," said Vishal Gupta.<br /><br />Gupta further added that it is important to grow the investor base for any market, and index inclusion helps in expanding the number of players, which further benefits everyone in the form of additional market liquidity.<br /><br /> "Global investors have been looking to allocate capital to emerging markets given their reluctance to invest in other large countries like Russia or China in the past couple of years. Hence, the timing of this index inclusion is also almost perfect.<br /><br /> I reckon investments will start via government bonds initially, but filter into AAA to lower credit ratings as well in the years to come", he continued. <br /><br />

Indian government bonds to be included JP Morgan Govt bond Index from June 28

Mumbai, Stating that the country's external balances are stronger than expected on the back of strong inflows, a Wall Street brokerage on Tuesday projected a much lower current account deficit which is likely to print at 1 per cent for this fiscal, leaving the balance of payment surplus at USD 39 billion. <keyword id="19906485" type="General" weightage="80" keywordseo="goldman-sachs" source="keywords">Goldman Sachs</keyword> in a report said the country's external balances remain favourable with a combination of low CAD, strong capital flows, adequate forex reserves and low external debt. <br /><br /> Combined with this, expectations for a weaker dollar due to the likely five <keyword id="19951097" type="General" weightage="80" keywordseo="us-fed" source="keywords">US Fed</keyword> rate cuts this year suggest a "goldilocks" environment for the country's external balances. <br /><br /> Accordingly, the Wall Street major has revised upwards its current account deficit (CAD) forecast to 1 per cent of GDP for FY24 from 1.3 per cent earlier, and 1.3 per cent for FY25 from 1.9 per cent earlier, citing a downward revision to their oil price forecast to USD81/barrel in 2024 from above USD90 earlier; and services exports continuing to surprise higher than prior expectations. <br /><br /> The brokerage expects robust capital flows in 2024, driven by strong equity portfolio flows as the Fed starts the easing cycle; robust debt inflows as the bonds are included in the JP <keyword id="20036913" type="General" weightage="80" keywordseo="morgan" source="keywords">Morgan</keyword>'s global government bond index from June 2024; and higher FDI inflows with the country continuing to benefit from regional supply chain diversification. <br /><br /> These capital inflows should help offset lower net corporate dollar borrowing inflows owing to sizable maturities of earlier loans coming up in 2024, it said, adding overall, the balance of payment surplus should jump to USD 39 billion in FY24 but fall to USD 27 billion in the next fiscal. <br /><br /> The country's oil imports fell to USD 164 billion in the January-November 2023 period from USD 189 billion a year ago as oil prices were 18 per cent lower during the period. <br /><br /> Similarly, services trade surplus is tracking higher as exports have surprised to the upside, driven by both business and software services. <br /><br /> With US growth remaining resilient, the report expects services export to remain strong and services trade balance will print in at USD 158 billion up from USD 148 billion. <br /><br /> These two will balance out the rise in gold imports which so far stood at USD39.6 billion and may close the fiscal USD44 billion from USD37 billion in FY23. <br /><br /> On the other hand non-oil and non-gold imports are tracking marginally higher than earlier forecasts driven mainly by electronic goods and machinery imports among the major sub-components, and may close the year at USD445 billion from USD440 billion. <br /><br /> Net FDI inflows stood at USD17 billion up to October 2023 compared to USD36 billion a year ago, while both equity and debt inflows have picked up in Q3 and at the current run rates they may close at USD28 billion this fiscal up from USD24 billion. <br /><br /> The report sees the country's external vulnerabilities remaining low with comfortable import cover at around 11 months, higher than the pre-pandemic average of 9.5 months, and the forex reserves as a share of external debt of 99 per cent is at its highest level in the past 10 years, excluding the pandemic years. <br /><br /> On the rupee, the brokerage said it continues to see the rupee as a relatively low-volatility carry currency. But quickly noted that despite this "goldilocks" scenario, the rupee is likely to underperform most EM Asia currencies as they expect the <keyword id="19899808" type="General" weightage="80" keywordseo="rbi" source="keywords">RBI</keyword> to accumulate inflows and build forex reserves at every opportunity. <br /><br /> They continue to expect the dollar/rupee pair to hover around 83-82 in the next three to six months, and then appreciate slightly to 81 over the next 12 months.

Goldman Sachs sees India current account deficit falling to 1% of GDP this fiscal

<ul class="summary-list"><li>US stocks fell Tuesday as investors prepare for earnings and CPI data. </li><li>Major investment banks will begin reporting quarterly results later this week. </li></ul><p>US stocks slipped again on Tuesday as investors prepare themselves for this week's earnings reports and anxiously await September's inflation report due out on Thursday.</p><p>Banking titans Goldman Sachs, JP Morgan, and Morgan Stanley are expected to release their quarterly results starting later this week, giving a glimpse into the health of the largest financial institutions. Warnings from Wall Street over a coming recession have been growing louder, with JPMorgan chief Jamie Dimon on Monday saying the US will face a downturn in six to nine months that could wipe away another 20% of the stock market's value. </p><p>All three major indexes opened lower Tuesday, with the Nasdaq Composite continuing to slide after touching a two-year closing low on Monday. Bond yields also inched higher, with the 10-year yield rising by about four basis points to 3.92%. </p><p>Thursday's inflation report will be crucial for determining the path of the Federal Reserve's rate hikes, and investors are preparing themselves for the market's reaction to Consumer Price Index data. Following last Friday's hot jobs report, economists and commentators expect the Fed to keep hiking by another 75 basis points, with <a href="https://markets.businessinsider.com/news/stocks/fed-interest-rates-pivot-early-gas-prices-inflation-goldman-sachs-2022-10">Goldman Sachs</a> warning investors not to count on a policy pivot until the economy weakens. </p><p><strong>Here's where US indexes stood shortly after the 9:30 a.m. opening bell on Tuesday: </strong></p><ul><li><strong> </strong><a href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest"><strong>S&amp;P 500</strong></a><strong>: </strong>3,588.05, down 0.67% </li></ul><ul><li><a href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest"><strong>Dow Jones Industrial Average</strong></a><strong>: </strong>29,142.88, down 0.21% (60 points)</li></ul><ul><li><a href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest"><strong>Nasdaq Composite</strong></a><strong>: </strong>10,457.54, down 0.8%</li></ul><p><strong>Here's what else is happening today:</strong></p><ul><li><a href="https://markets.businessinsider.com/news/bonds/market-outlook-bank-of-england-bond-buying-gilts-treasurys-analysis-2022-10">The Bank of England</a> began its second market intervention today, scrambling to quell volatility in bonds after the UK presses forward with its new mini-budget.</li><li><a href="https://markets.businessinsider.com/news/commodities/oil-price-outlook-russia-g7-crude-cap-125-barrel-ubs-2022-10">Oil will hit $125</a> a barrel as the plan to cap Russian oil prices is threatening to tighten market supply even further, UBS said in a note.</li><li>Top economist <a href="https://markets.businessinsider.com/news/stocks/federal-reserve-mistakes-interest-rate-hikes-economist-mohamed-el-erian-2022-10">Mohamed El-Erian</a> warned the Fed's delayed response to inflation has threatened US financial stability, and there would be "no ladder out of this hole" for the central bank.</li></ul><p><strong>In commodities, bonds, and crypto:</strong></p><ul><li><a href="https://markets.businessinsider.com/commodities/oil-price?type=wtisource=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest">West Texas Intermediate crude</a> slipped about 2% to $89.33 per barrel.<a href="https://markets.businessinsider.com/commodities/oil-price"> Brent crude,</a> the international benchmark, fell 1.7% to $94.53 a barrel. </li><li><a href="https://markets.businessinsider.com/commodities/gold-price?utm_medium=ingest&amp;utm_source=markets">Gold</a> was mostly flat, trading at $1,675 per ounce.</li><li>The <a href="https://markets.businessinsider.com/rates/u-s--rates-10-years">10-year Treasury yield</a> rose four basis points to 3.92%.</li><li><a href="https://markets.businessinsider.com/currencies/btc-usd">Bitcoin</a> lost 1.4% to trade around $19,098.</li></ul>

US stocks slip as bond yields edge higher and investors prepare to sift through corporate earnings

<ul class="summary-list"><li>Wall Street's key stock indexes ended at record highs on Monday. </li><li><keyword id="6354298" type="DEFINITION" weightage="60" keywordseo="Stocks">Stocks</keyword> advanced ahead of the second-quarter <keyword id="198950" type="PERSON" weightage="60" keywordseo="earnings-season">earnings season</keyword> which starts on Tuesday. </li><li>Disney and Goldman Sachs shares were winners on the <keyword id="70622" type="ORGANIZATION" weightage="60" keywordseo="Dow-Jones-Industrial-Average">Dow Jones Industrial Average</keyword>. </li></ul><p>US stocks finished at record highs on Monday, before the start of a new round of earnings reports that should show profit growth for Corporate America. </p><p>All three of Wall Street's benchmark indexes notched new closing highs, with the Dow industrials and the <keyword id="123873" type="PERSON" weightage="60" keywordseo="SP-500">S&amp;P 500</keyword> overcoming losses earlier in the day. Among the Dow's winners, <a href="https://markets.businessinsider.com/stocks/dis-stock">Disney</a> rose after saying its Disney Plus streaming service pulled in $60 million from this weekend's release of Marvel Studios' "Black Widow" movie. </p><p><strong>Here's where US indexes stood at 4:30 p.m. on Monday:</strong></p><ul><li><a href="https://markets.businessinsider.com/index/s&amp;p_500?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestedium=ingest"><strong>S&amp;P 500</strong></a><strong>: </strong>4,384.75, up 0.35%</li><li><a href="https://markets.businessinsider.com/index/dow_jones?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest"><strong>Dow Jones Industrial Average</strong></a><strong>: </strong>35,000.85, up 0.37% (130.76 points)</li><li><a href="https://markets.businessinsider.com/index/nasdaq_composite?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest"><strong>Nasdaq Composite</strong></a><strong>: </strong>14,733.24, up 0.21%</li></ul><p><a href="https://markets.businessinsider.com/stocks/gs-stock">Goldman Sachs</a> and<a href="https://markets.businessinsider.com/stocks/jpm-stock"> JP Morgan Chase</a> advanced ahead of the release of their financial results early Tuesday in what's considered the kickoff to the second-quarter earnings season. S&amp;P 500 companies are expected, on average, profit growth of 64%, led by the energy and industrial sectors, according to FactSet. </p><p>"With expectations high (again), it won't be easy for companies to handily clear the bar like they did the past several quarters. We also recognize that stock valuations are elevated, so disappointments will likely be punished. Stocks need strong earnings to come through to justify those valuations, and we think we'll get them," said strategists at LPL Financial in a Monday note. </p><p>Around the <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword>, <a href="https://markets.businessinsider.com/stocks/spce-stock">Virgin Galactic</a> shares turned sharply lower after the company said it could <a href="https://markets.businessinsider.com/news/stocks/virgin-galactic-stock-price-richard-branson-space-flight-premarket-2021-7">sell up to $500 million worth of stock</a> following a successful space test flight with founder Richard Branson on board.</p><p><a href="https://markets.businessinsider.com/news/bonds/mohamed-el-erian-stocks-vulnerable-bond-yields-federal-reserve-inflation-2021-7">Markets veteran Mohamed El-Erian</a> said stocks are vulnerable to falls despite the recent drop in bond yields and could be rocked when the US Federal Reserve starts to unwind its support. </p><p><a href="https://markets.businessinsider.com/commodities/gold-price?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest">Gold</a> rose 0.9% to $1,805.68 per ounce. Long-dated US Treasury yields rose, with the 10-year yield at 1.363%. </p><p>Oil prices were mixed. <a href="https://markets.businessinsider.com/commodities/oil-price?type=wti?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestm=ingest">West Texas Intermediate crude</a> declined 0.6%, to $74.12.<a href="https://markets.businessinsider.com/commodities/oil-price?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestce=markets&amp;utm_medium=ingest"> Brent crude</a>, oil's international benchmark, picked up 0.1%, to $75.23 per barrel . </p><p><a href="https://markets.businessinsider.com/currencies/btc-usd">Bitcoin</a> dropped 3.9%, to $32,910.95.  </p>

All major US stock indexes close at record highs ahead of a flood of corporate earnings

<p></p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"></div><p></p></div></div>The chief global strategist at JP Morgan Asset Management gave clients two key&#xa0;tips on how to invest in 2017 - and they are pretty simple.<p>In a brief client note, David Kelly said that these are two "brief financial resolutions" investors should consider this year:</p><p style="padding-left: 30px;">1. Avoid home country bias - Kelly says that there i<span>s "the tendency of investors around the world to be over-invested in securities of their own country."</span></p><p style="padding-left: 30px;">2. Don't focus on past performance - Kelly says that investors should not stuff their portfolios with assets that have previously had a stellar run, instead they should look at "<span>current valuations and future prospects.&#xa0;</span><span>These valuations and prospects suggest more reasons for caution around U.S. stocks and optimism around international stocks than investors have demonstrated over the last few years and particularly over the last few weeks."</span></p><p>On the final trading day of 2016, t<span>he FTSE 100, Britain's benchmark share index, hit a fresh closing high, marking the third time in <a href="http://uk.businessinsider.com/ftse-100-price-movements-on-friday-december-30-2016-12">three days that the index has broken all-time highs</a>.</span></p><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div></span></p><p><span>In the US, the S&amp;P 500 was up over 10% across the year:</span></p><p><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div></span></p><p>"Investors reflecting upon a politically tumultuous 2016 should actually be fairly pleased by the returns that global asset markets have delivered. Global equities rose around 10% (with small caps far exceeding that) and global bonds eked out a modest return," said Kelly.</p><p>Here is the chart from JPMAM:</p><p></p><div class="KonaFilter image-container display-table"><div><div class="image on-image"></div><p></p></div></div><p>Stocks in particular have performed strongly over the last year, despite political upheaval from the Brexit vote, the election of a new US president, as well as a flurry of new elections happening across Europe.</p><p>Kelly points out that there has been a key driver for the markets despite the shift in the political landscape - commodities.</p><p>"A bounce in commodity prices has been a key driver for markets, helping emerging market equities and allowing credit markets to recover from the distressed levels seen a year ago," said Kelly.</p><p>"The resilience of economic growth has also been important, pushing unemployment rates in most major countries below the levels at which they started 2016. Food for thought as we ponder an action-packed 2017."</p><p>&#xa0;</p><div></div>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/wwe-cmo-vince-mcmahon-lesson-success-risk-2016-12">WWE CMO: The most valuable lesson Vince McMahon taught me about business</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="dvbGU5ODE6TIggiWm-Cbjw37nsucxefB" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

The 2 big investing tips for 2017 from a JP Morgan strategy chief

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Reuters</span></p></div><p></p></div></div>Global economic growth is pretty tepid right now and in many advanced economies inflation is nowhere to be seen.</p><p>So what do some central banks do? Cutting interest rates is a typical tool for stoking inflation and growth. But once banks hit zero interest rates, and they still can't fuel inflation, where else can they go? - Some go into negative territory.</p><p>Negative interest rates are intended to<span> encourage borrowing, discourage upward pressure on currencies, and help trade.</span></p><p>However, while the <a href="http://uk.businessinsider.com/swedish-inflation-rate-grows-for-the-first-time-in-more-than-a-year-2016-2">Swedish government's massive experiment with negative interest rates seems to actually be doing what it's supposed to</a> - according to <a href="http://www.scb.se/en_/Finding-statistics/Statistics-by-subject-area/Prices-and-Consumption/Consumer-Price-Index/Consumer-Price-Index-CPI/Aktuell-Pong/33779/Behallare-for-Press/399118/">the Riksbank monthly inflation report</a> - which dropped on February 18, negative rates are having a much broader impact around the world.</p><p><span>JP Morgan Asset Management Global Market Strategist Alex Dryden highlighted to Business Insider that "<span>a quarter of the world's government bonds are now guaranteeing a fixed loss for investors holding to maturity" because of central banks around the world starting to either implement or debate installing negative interest rates.</span></span></p><p><span><span>Here's the killer chart:</span></span></p><p><span><span><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>JPMorgan Asset Management</span></p></div><p></p></div></div></span></span></p><p>A handful of countries have already said goodbye to ZIRP (zero interest rate policies) and hello to NIRP (negative interest rate policies). The goal of negative rates is to deter institutions from storing cash in banks and to flush that cash out into alternative investments, spurring the economy, growth, and inflation.</p><p><a href="http://uk.businessinsider.com/bank-of-japan-announces-negative-interest-rates-2016-1">Japan is just the latest</a>. </p><p><span>"The low yield environment we've been in since the financial crisis has evolved into a no yield environment as central banks begin to explore the world of negative rates," said Dryden to Business Insider. </span></p><p><span>"Since the surprise announcement by the Bank of Japan (BoJ) that they would cut rates into negative territory, the percentage of bonds globally yielding in negative territory has surged to 27.2%. In other words, a quarter of the world's government bonds are now guaranteeing a fixed loss for investors holding to maturity."</span></p><p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="http://uk.businessinsider.com/switzerland-negative-interest-rates-electronic-cash-2015-12"><p class="source"><span>REUTERS/Pawel Kopczynski</span></p></a></div><p></p></div></div>Switzerland<span><a href="http://uk.businessinsider.com/switzerland-negative-interest-rates-electronic-cash-2015-12"> instituted negative rates in the 1970s</a> in an attempt to deter a flood of foreign investment, while i</span>n 2009 Sweden's Riksbank became the first central bank to implement a negative interest rate in the aftermath of the financial crisis. </p><p><a href="http://www.scb.se/en_/Finding-statistics/Statistics-by-subject-area/Prices-and-Consumption/Consumer-Price-Index/Consumer-Price-Index-CPI/Aktuell-Pong/33779/Behallare-for-Press/399118/">The Riksbank dropped its monthly inflation report</a> on February 18, and for the first time in more than a year, inflation has ticked upward substantially. </p><p>The January reading came in at 0.8%, well above the forecasts of economists, who had predicted a 0.5% inflation rate.</p><p>More significantly though, that figure is higher than at any point since 2012, and the first rise since the introduction of negative interest rates, signaling that the experiment may finally be working.</p><p>The Swiss National Bank, Denmark's Nationalbank, and the European Central Bank have since joined the Swedes, setting some of their policy rates in negative territory.</p><p>At the moment, no central bank interest rates are very deeply negative. For example, <a href="http://uk.businessinsider.com/european-central-bank-meeting-january-2016-2016-1">the ECB deposit rate is at -0.30%.</a> But this is killing off government bond returns for investors.</p><p><span>"Unsurprisingly the worst affected region is the Eurozone where 35% of Eurozone government bonds yield below 0% whilst 75% of the index is yielding below 1%. The German bond yield is now negative out to a maturity of 8 years," said Dryden.</span></p><p><span>But it's not all bad news. In fact, it looks like the lack of return from government bonds will produce support for stocks.</span></p><p><span>"For investors seeking yield, this heightens the relative attractiveness of credit, including high yield debt. It also makes dividend paying equities look more interesting," said Dryden.  </span></p><p><span>"The <keyword id="6354868" type="COUNTRY" weightage="60" keywordseo="UK">UK</keyword> is a good example. Even with average dividends arguably under pressure in the FTSE, the UK still offers a high average dividend yield (4%) compared to the rest of the world. Even e<span>xcluding energy stocks</span>, the UK currently offers a 50% higher dividend yield compared to MSCI World."</span></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/trump-used-corporate-bankruptcy-stay-rich-2016-2">How Donald Trump used bankruptcy to stay rich</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="NscnRseDqHjvzkuXkzuTkzEe5ccDcaP0" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Negative interest rates are 'guaranteeing a fixed loss' for a quarter of the world's government bonds

<p><span style="font-size: 15px; line-height: 1.5em;"><div class="image-container float_right" style="width:480px"><div class="image"><p class="source">REUTERS/Keith Bedford</p><p class="caption">An interactive kiosk sit on display at the JC Penney Experience store in Times Square in New York March 2, 2006. The virtual store, which will be open for three weeks, allows shoppers to browse exclusive lines and purchase the company's full range of merchandise online at interactive kiosks. J.C. Penney Co. Inc. said on Thursday its February sales rose 2.3 percent at stores open at least a year.</p></div></div>(Reuters) - It was a "century" deal, but in hindsight it was hardly the deal of the century.</span></p>
<p>More than 17 years and a dozen credit downgrades ago, JCPenney Co Inc. joined an elite club in capital markets circles by issuing a rare <span class="highlight">100-year</span> bond.</p>
<p>The deal from Penney, then sporting a mid-range investment-grade rating of "A" from Standard &amp; Poor's and coming off record holiday-season sales, matched the year's largest "century bond" deals at $500 million, but the company stood out as the only retailer in the mix.</p>
<p>By all accounts the sale of the 7-3/8 percent notes due 2097, managed by Credit Suisse, JP Morgan, Morgan Stanley and Merrill Lynch, went smoothly. The future seemed bright: Penney was riding high on investor optimism about its $3.3 billion purchase of the Eckerd drug store chain months earlier and within 18 months its stock would be at then record highs.</p>
<p>But 100 years makes for one long bet, particularly on a player in a sector as flighty as mass-market retailing, and it's been anything but smooth sailing since.</p>
<p>Like the stock, Penney's <span class="highlight">bonds</span>, long since fallen deep into junk status with a CCC- rating, have taken it on the chin as the store group's sales have plunged <span class="highlight">amid</span> a disastrous pricing and marketing strategy and failed attempt to appeal to the more affluent shopper. Its recent related tussle with activist hedge fund investor Bill Ackman, and uncertainty about the status of its vendor financing deals, have further undermined investor confidence.</p>
<p>It is now facing a very uncertain holiday season with a temporary CEO at the helm following its firing of Ron Johnson, the former Apple executive who was largely seen as the architect of its failed strategy.</p>
<p>The 2097 <span class="highlight">bonds</span> have fallen 21 percent in price since mid-May, and are currently trading at 67 cents on the dollar, near their lowest since the financial crisis. They offer a yield of 11.38 percent. By contrast, the average effective yield on <span class="highlight">bonds</span> in the Bank of America Merrill Lynch CCC and Lower U.S. High Yield Index, an index of lower-rated junk <span class="highlight">bonds</span>, is 9.77 percent.</p>
<p>Some big names in the bond business can be counted among the casualties.</p>
<p>Loomis Sayles &amp; Co. holds about $19.4 million of the <span class="highlight">bonds</span> as of June 30, according to Emaxx, a bond investor tracking service owned by Thomson Reuters.</p>
<p>Dan Fuss, vice chairman and portfolio manager at Loomis, said the firm, which has $190 billion in assets, is reassessing its position.</p>
<p>"When you lose market share, it is difficult to stop the bleeding, especially in retail," Fuss said.</p>
<p>Back in 1997, the Penney deal came to market in what turned out to be the banner year for "century bond" issuance.</p>
<p>Following on IBM's <IBM.N> record $850 million deal in December 1996, ultra-long bond fever struck Wall Street and corporate treasurers alike, and an unprecedented 26 investment grade century bond sales totaling $7.12 billion hit the market over the next 12 months, according to IFR Markets data.</IBM.N></p>
<p>Car makers Ford <F.N> and Chrysler both sold $500 million, as did Baby Bell operators Bell South and US West. Railroads Norfolk Southern <NSC.N> and Burlington Northern Santa Fe clocked in at $350 million and $200 million respectively, and Boston University raised $100 million.</NSC.N></F.N></p>
<p>In all, IFR data shows 65 U.S. <span class="highlight">100-year</span> <span class="highlight">bonds</span> with a face value of $16.29 billion have been issued since Walt Disney <DIS.N> and Coca-Cola <KO.N> debuted century deals on successive days in July 1993. Recent ultra-long issuance has been dominated by high-rated universities, which account for six of the 10 deals since the financial crisis, led by Massachusetts Institute of Technology's $750 million deal in May 2011, largely on the basis that they are more likely to be around in the next century than many companies.</KO.N></DIS.N></p>
<p>In fairness to Penney's <span class="highlight">bonds</span>, few of the century <span class="highlight">bonds</span> have fared well of late as the corporate bond market has been whipsawed by investor anxiety over the future of the U.S. Federal Reserve's massive stimulus program.</p>
<p>High-grade <span class="highlight">bonds</span> like IBM's 2096s, rated AA-, have dropped 18 percent in price since early May. Even MIT's AAA-rated notes due 2111 have shed 19.3 percent in price in that time, with their yield climbing nearly a full percentage point to 4.88 percent.</p>
<p>Still, the questions around Penney's future suggest more volatility ahead. Its credit default swaps, insurance against a default, price a nearly 65 percent default probability in five years and 85 percent over 10 years, according to data from Markit. For some bond mavens, that's just too much risk to take on.</p>
<p>Portfolio manager Bonnie Baha, who heads Global Developed Credit at DoubleLine, said the $57 billion bond house has had Penney <span class="highlight">bonds</span> on its "avoid" list for years and doesn't buy the argument that Penney's swooning securities don't take into account the value of the <span class="highlight">retailer's</span> real estate.</p>
<p>"In the era of Amazon.com and other online retailing, I don't think much of legacy real estate assets of the Big Box stores," Baha said.</p>
<p>(Additional reporting by Jennifer Ablan and Anthony Rodriguez at IFR; Editing by Martin Howell and Leslie Gevirtz)</p>

JCPenney's 100-Year Bond Gamble Falls Apart

<p><div class="KonaFilter image-container float_right"><div class="image on-image"><p class="source"><span>REUTERS/Danish Ismail</span></p><p class="caption">Stunt performer rides a motorbike on the walls of the "Well of Death"</p></div><p></p></div><em><strong>FA Insights is a daily newsletter from Business Insider that delivers the top news and commentary for financial advisors.</strong></em></p>
<p><strong><a href="http://blog.alliancebernstein.com/index.php/2014/03/26/two-things-municipal-bond-investors-can-do-today/">How To Boost Your Bond Portfolio Without Taking On Too Much Interest Rate Risk</a> (The AllianceBernstein Blog)</strong></p>
<p>Investors expecting interest rates to rise are worried about their bond investments. Guy Davidson writes that there are two things municipal bond investors can do to boost income. "Long-maturity, high-yield bonds as a good opportunity for investors who want to be defensive but are looking to boost their income today," he writes. These offer more income at the moment and their credit quality is expected to improve. Moreover, he says their 2013 underperformance had little to do with fundamentals. </p>
<p>"For more conservative investors, we think that it makes sense to reduce interest-rate risk by selling long bonds and using the advantages of intermediate-term municipals to enhance returns," he writes. "A key piece of the puzzle is roll, the natural price gain a bond experiences as it moves closer to maturity. Today's very low short-term rates mean that the intermediate part of the yield curve is steep, particularly for bonds with five- to eight-year maturities."</p>
<p><strong><a href="https://www.jpmorganfunds.com/blobcontent/647/343/1272924627455_JP-GTR.pdf">Every Investor Needs To Remember This Retirement Equation</a> (JP Morgan Asset Management) </strong></p>
<p>There are six key things to consider when it comes to your retirement and you will have better control of some (like your saving and spending habits or portfolio risk) than others (market returns). Here's a look at the retirement equation from JP Morgan Asset Management's 2014 'Guide to Retirement'.</p>
<p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="JP Morgan Asset Management" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/53332c916da8110d3486ebb2-960/screen shot 2014-03-26 at 3.33.51 pm.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span><a href="https://www.jpmorganfunds.com/blobcontent/647/343/1272924627455_JP-GTR.pdf">JP Morgan Asset Management</a></span></p></div><p></p></div></div></p>
<p><strong><a href="http://www.investmentnews.com/article/20140326/FREE/140329938">Affluent Investors Are Delaying Retirement</a> (Investment News) </strong></p>
<p>A study by Market Strategies International has found that only 28% of affluent investors "are highly confident that they can generate enough income in retirement to cover all of their expenses," reports Carl O'Donnell at Investment News. The average respondent said he or she was delaying retirement till 68. The "demise of pensions," medical costs, and longer lifespans are all weighing on retirement security. </p>
<p>"Prior generations had steady jobs with pensions so there's a certainty of collecting a paycheck each week," Michael Solari, principal at Solari Financial Planning, told O'Donnell. "Baby boomers have had to figure out how much to save, how to invest and how to budget expenses. Even if they do it right, there's no guarantee that they'll collect the same paycheck each week."</p>
<p><strong><a href="http://www.businessinsider.com/dollar-cost-averaging-2014-3">If You're Worried About A Stock Market Crash Here's How To Start Investing Now</a> (Business Insider)</strong></p>
<p>After a stellar stock market run, many are worried that they're buying at the top and that a correction is coming. But Business Insider's Andy Kiersz writes that investors should consider dollar-cost averaging - in which you invest a fixed amount of money in an asset at fixed times. "Dollar-cost averaging isn't about losing money as the stock market falls. It's about buying increasing amounts of shares at cheaper prices, which means bigger returns during the rally."</p>
<p>"If you are investing for the long haul, and can hang on through watching your portfolio's value drop temporarily in bad times, starting to invest in stocks, even near a peak, may not be as terrifying as it looks. The market has always bounced back sooner or later, so if you can hold on until that later, don't panic."</p>
<p><strong><a href="http://www.businessinsider.com/sp-500-q4-2014-buybacks-dividends-2014-3">S&amp;P 500 Companies Shoveled $214 Billion In Cash Back To Shareholders Last Quarter </a>(Business Insider) </strong></p>
<p>American companies continue to sit on piles of cash. As economic growth continues to totter along, companies are putting the money towards dividends and share buybacks. "Companies continue to increase their shareholders' returns through buybacks and cash dividends," says S&amp;P senior index analyst Howard Silverblatt. </p>
<p>"These two expenditures, combined, reached $214.4 billion in the fourth quarter - the second highest level (Q3 2007 holds the record at $233.2 billion) and three times the Q2 2009 Bear market level ($71.8 billion). Helping companies do this are record earnings, record cash-flow and record cash reserves; pushing companies are activist investors and the growing concern within board room over outside holders 'coming in'." Some economists do however think a business spending boom is coming soon.</p>
<p><div class="KonaFilter image-container display-table click-to-enlarge"><div><div class="image"><a title_source="S&amp;P" title_caption="" class="zoomin" href="https://static-ssl.businessinsider.com/image/5332eed769bedd8e2a86ebb9-960/ch-184.jpg"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span>S&amp;P</span></p></div><p></p></div></div></p>

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