Yields 4% Draw Janney, Northern Trust as Hop Sales

U.S. bonds business investment grade are attracting investors bet a struggling labor market will help contain inflation after yields rose above 4 percent for the first time since early August.

Yields on the debt of borrowers in Bentonville, Arkansas-based Wal-Mart Stores Inc., the maker of computer software to Oracle Corp. in Redwood City, California, have increased from an average of 3.53 November 4 percent, the lowest in history, as gains in manufacturing sales and retail sales data indicated an improvement in the economy, according to the rate of Bank of America Merrill Lynch, which tracks over of 4,400 bonds.

U.S. unemployment, which rose in November to the highest level since April, may take five years to fall to a normal level, while it is possible that the Federal Reserve will buy more than $ 600 million Treasury bonds announced last month, Chairman Ben S. Bernanke said in an interview broadcast yesterday. increased demand caused yields on corporate bonds to tighten in relation to public debt in the past three days last week to the widest since October 21.

"The soft economic news actually put a bid in bond prices," said Mark Luschini, chief investment strategist at Philadelphia-based Janney Montgomery Scott LLC, which has $ 50 billion in assets under management. "Bonds of Love weakened the prospects for economic data."

Spreads Shrink

The extra yield investors demand to own corporate bonds with investment grade bonds instead of Treasuries fell to 179 basis points, or 1.79 percentage points, from 03 December 182 to the end of November in the U.S. . UU. reported that the unemployment rate rose to 9.8 percent, Bank of America Merrill Lynch index data show. The increase in unemployment led to speculation that consumers will have character of expenditure, keeping inflation accelerates and the erosion of fixed-income payments of bonds.

"In investment grade credit is attractive here," Nicholas said Finkelman, who helps oversee $ 3.5 billion of bonds as a money manager in New York, Inc., based Ryan Labs, which last week bought debt securities issued by American International Group Inc.

Elsewhere in credit markets, spreads on corporate bonds across the world widened 5 basis points last week to 176 basis points, according to Bank of America Merrill Lynch Global Broad Market Corporate Index. yields reached 177 basis points on November 30, the highest since 08 September. Yields rose to an average of 3.83 percent from 3.7 percent.

European Divisions

Italy and Spain led an increase in the cost of insuring bonds sold by the most indebted countries in Europe against the failure of the divisions arising in the best way to limit the spread of the crisis in the region with budget deficits.

Officials disagree on whether to raise 750 million euros ($ 1 billion) bailout fund and introduce European bond joint meeting in Brussels.

Swaps credit-default in Italy rose 10 basis points to 219, while contracts linked to Spain rose 10.5 basis points to 307.5, according to data provider CMA. The Markit iTraxx Index SovX Western European governments swaps rose 15 basis points to 6.25 183.

Swaps credit-default tend to fall as improving investor confidence and rising as it deteriorates. Contracts pay the buyer face value if a borrower defaults on its obligations, less the value of the defaulted debt. A basis point equals $ 1,000 annually on a contract protecting $ 10 million of debt.

The Standard & Poor's / LSTA U.S. leveraged loan 100 Index fell 0.05 cent to 91.76 cents, after falling as low as 91.61 on November 30. Prices in the index, which measures the 100 largest dollar loans first lien leveraged, have fallen 92.72 cents on Nov. 9, the highest since May 3. leveraged loans and junk bonds are rated below Baa3 by Moody's Investors Service or below BBB-by S & P.

Emerging Markets

In emerging markets, the relative yields fell 12 basis points to 240 basis points, the biggest drop in four weeks, according to JPMorgan Chase & Co. index data.

The U.S. bond sales investment grade rose to $ 17.1 million last week, up from 14.25 billion U.S. dollars in the previous two weeks.

Westpac Banking Corp., raised $ 2.5 billion in an offering of three parts, the largest U.S. Corporate bond sales by a foreign bank in six weeks. The Sydney-based lender's $ 1 billion over five years, three percent notes rose 0.7 percent in the December issue price from 2 to 100.6 cents, according to Trace, the bond information system The price of the Financial Industry Regulatory Authority.

AIG Sale

AIG sold $ 2 billion of bonds in its bid for the first time since the insurer was rescued by the U.S. government in 2008.

The company based in New York for $ 1.5 billion of 6.4 percent notes due December 2020 rose 0.7 percent in the November issue price from 30 to 100.45 cents, monitoring data show. The bond is rated A3 by Moody's, the seventh level of investment grade, and an equivalent A-by S & P.

European efforts to combat the deficit will also help prevent inflation, helping prop up prices here, according to William Dennehy, managing director of fixed income funds with Chicago-based Northern Trust Corp., which has $ 150 billion in assets under management.

"We like investment-grade credit this content," said Dennehy, who said Northern Trust was the purchase of newly issued bonds last week.

Fed officials on November 12 began a second round of purchases of assets to support the growth of the economy, reduce unemployment and prevent deflation. The Fed has kept its benchmark rate in a range from zero to 0.25 percent for two years.

The Labor Department reported on 03 December that the economy created 39,000 jobs in November, less than the most pessimistic forecast of 87 economists surveyed by us. The median forecast of the survey was more than 150,000 jobs.

Bernanke Interview

"At the rate we're going, it could be four, five years before we are back to a normal unemployment rate" of 5 percent to 6 percent, said Bernanke s CBS "60 Minutes" program. The purchase of more bonds than expected is "certainly possible," said Bernanke, 56. "It depends on the effectiveness of the program" and the outlook for inflation and the economy.

Corporate profits are headed for its best annual performance since 1988, with analysts forecasting a 37 percent growth this year. He estimates the coming year will see an increase of 14 percent, according to projections compiled by us.

bonds of the company must overcome the public debt in 2011 as yields remain compelling relative decline, net sales and profit values of quantitative easing by the Fed, Barclays Capital analysts led by Eric Miller wrote in a report of 03 December.

Spreads remain wider

Spreads on high quality corporate bonds are still above the average of about 92 basis points in 2007, before credit markets began to freeze. Yields on U.S. debt investment grade government bonds exceed 250 basis points next year, the analysts wrote.

investment grade bonds have returned 9.52 percent this year, while Treasury bonds have gained 6.88 percent, Bank of America Merrill Lynch index data show.

The net amount of corporate bonds issued is expected to plummet by 30 percent to 285 billion U.S. dollars of debt, excluding those from U.S. banks, is redeemed, Barclays analysts said.

"The amount of fixed income assets available to buy next year will be lower," said Jeffrey Meli, co-head of U.S. credit strategy at Barclays Capital in New York. "This is one of the most important drivers of performance for the next broadcast year of investment grade. There will be less paper to buy."