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Bonds are often overlooked and misunderstood investments in Australia, with property and shares being more popular choices. However, bonds offer regular income and portfolio diversification. Bonds are a form of lending to a company or government, with a face value and an annual interest payment. Government bonds are considered very safe, while corporate bonds carry more risk. Bonds are negatively correlated with equity markets, making them a defensive asset. They provide diversity in returns and losses, with lower long-term returns compared to shares. The allocation to bonds in a portfolio depends on the investor's timeframe and risk profile. Bonds can be purchased individually or through funds or ETFs. Bonds are often compared to insurance, providing stability in a diversified portfolio. Bond yields have risen recently due to higher interest rates. Investment bonds are a tax-effective savings and investment structure that can hold various assets. They offer simplicity and flexibility compared to superannuation. [Extracted from the article]

The article discusses two separate research papers. The first paper examines the factors that influence changes in household asset allocation patterns, finding that three factors (long-term equity risk premium, credit premium, and municipal bond premium) explain 81% of the variation in rebalancing across asset classes. The second paper analyzes the impact of central bank announcements on interest rates and exchange rates during the COVID-19 pandemic. It finds that "whatever-it-takes" announcements had a greater effect on lowering bond yields compared to size-limited announcements, and that open-ended announcements had a significant impact on longer-term yields. The researchers caution that central banks cannot solely rely on whatever-it-takes policies in future crises. Additionally, the article briefly mentions another research paper that examines the effects of increased immigration enforcement on public safety, specifically among Hispanics. The study finds that the Secure Communities program led to a decrease in crime reporting among Hispanics and an increase in victimization rates. [Extracted from the article]

Municipal bonds remained stable on Monday after a week of market volatility, with U.S. Treasury yields decreasing and equities showing mixed results. Market participants are awaiting economic indicators for the week, particularly the Producer Price Index and Consumer Price Index reports. The muni yield curve has returned to positive territory, and muni yields have become more attractive compared to corporate bonds. Despite some delays in deals due to market swings, this week's $7.4 billion slate of issuances is seen as a relief. Investors continue to add money into muni mutual funds, anticipating a rate cut by the Federal Reserve in September. [Extracted from the article]

A group of investors has challenged the legality of the Regents of the University of California's ability to trigger an extraordinary redemption provision to refund their outstanding Build America Bonds (BABs). The investors argue that the Regents have no legal basis to redeem the securities in this manner. The challenge comes as other issuers are also considering using the extraordinary redemption provision to refund their BABs. The outcome of this challenge may impact future refundings and may lead to increased tax-exempt supply if the refundings proceed. [Extracted from the article]

Alternative lenders are stepping in to fill the gap left by banks in the UK property market, offering developers a wider range of debt products. While banks' SME lending is still falling, developers are seeking short-term and long-term finance options to capitalize on opportunities in the market. Alternative lenders, private credit, and peer-to-peer lending are becoming popular choices for developers, with interest rates ranging from 6% to 15%. Additionally, the recovery of the UK corporate bond market is making it easier for developers to secure long-term financing or refinance projects nearing completion. [Extracted from the article]

Municipal bonds (munis) outperformed U.S. Treasuries and corporates on Friday due to sparse secondary trading and the lack of primary issuance. Despite volatility, the muni market remains solid, with ratios trending sideways. The AAA part of the muni investment grade index has underperformed, while lower-rated credits have done better. The lack of larger new-issue supply has contributed to the strength of the muni market. However, concerns about rates and high-grade valuations being rich remain. Municipal CUSIP request volume fell in January, but overall municipal volumes are up compared to the previous year. [Extracted from the article]

The first trading session of 2024 saw municipal bonds lightly traded and little changed, while U.S. Treasuries were weaker and equities lost ground. Municipal-to-Treasury ratios decreased, with the two-year ratio at 56% and the 30-year ratio at 84%. The municipal market experienced a rebound in 2023, with a broad market index gaining 2.3% in December and finishing the year up 6.4%. High-yield munis returned 9.2% in 2023, and total municipal supply for the year was $379.992 billion. The outlook for 2024 includes higher muni yields, increased supply, and opportunities for investors. [Extracted from the article]