(Stool Pigeons Wire) Stock action is nothing compared to what I’m seeing in EM bond land. The buying frenzy has gotten to a point where it no longer looks like there’s no tomorrow, but instead as if there’s no next five minutes.
The street has little to no inventory, and the buyers just lift offers from the dealer screens as if they were Nasdaq stocks. New issue junk deals that no one would touch just a couple of months ago are now being repriced before they even settle, and then gap up 2 or 3 points in the grey market. Argentine defaulted debt has rallied 50% in the last month alone.
Short term sustainable? Yes, the flows are there. Money is still pouring into bond funds like mad, and into EM bond funds like crazy.
Long term sustainable? I would guess not, but anyone who has even dared to short a bond in this environment has gotten their teeth kicked down their throat so hard they have to eat and chew out of their arse now.
Would I buy one of these bonds for my grandmother? No. But if I am a benchmarked bond investor, I have to try and get the biggest allocation possible to the filthiest piece of garbage I can get my hands on in the primary market, ´cause the secondary is always and already a couple of points higher.
Loco, loco, loco, but hey…. it is what it is.