Bonds End Mixed, With Solid TIPS Auction Blunted By Anticipation Of Further Supply and Platinum And Palladium ETFs Launch

Gains were curbed as investors cleared space for this week’s flood of government and corporate debt supply, analysts said.

Investors have grown worried that the government’s burgeoning debt load will hurt its long-term creditworthiness and endanger its coveted AAA rating from agencies.

Monday’s auction of 10-year Treasury inflation-protected securities, part of this week’s $84 billion in new government bond supply, soothed some of those concerns, analysts said.

“The supply was easily absorbed. It shows there’s still a lot of demand out there,” said Michael Pond, a strategist at Barclays Capital.

The solid bidding for TIPS, an inflation hedge, coincided with another inflation gauge reaching a record high.

But chances of a resurgence in inflation remain remote, economists say, as high unemployment and a spotty housing market have been drags on the economic recovery.

Friday’s disappointing jobs report underscored that view. [Read the full article]

ETF Securities on Friday launched the first U.S.-traded ETFs that are physically backed by platinum and palladium. Each share of ETFS Physical Platinum Shares (PPLT) and ETFS Physical Palladium Shares (PALL) represents one-tenth of an ounce of the underlying metal – similar to the most widely traded gold ETF, SPDR Gold Shares (GLD).

Plates and ingots of the metals are stored in vaults in undisclosed locations in the U.K. and Switzerland, with JPMorgan as the custodian.

PPLT will compete with two exchange traded notes: UBS E-TRACS Long Platinum Trust (PTM) and iPath DJ AIG Platinum Trust Sub-Index (PGM). These offer the returns of the underlying metal but are backed by debt notes, which subject buyers to the provider’s credit risk.

Although more rare than gold or silver, platinum is found in (or used in the production of) one in every five consumer products. [Read the full article]

Analysts’ consensus expects aggregate earnings among S&P 500 companies to jump 184% vs. last year’s fourth quarter, according to Thomson Reuters. But a big slice of those profits comes from companies cutting payrolls, operations and capital spending programs – that is, becoming smaller and more efficient.

Sales growth, tied to increasing demand, a company expanding its product lines or growing its market share, is expected to rise a much softer 7% for S&P 500 companies.

So we scanned for stocks expected to grow sales 20% or more for the quarter. A few industry groups jumped into focus. Semiconductor makers, investment managers, trade schools and computer software makers show some of the best sales growth forecasts.

Twenty-seven chipmakers are forecast to top 20% sales growth for Q4, with an average 48% advance.

Stocks in that list with the best EPS performance include Atheros Communications (ATHR), SanDisk (SNDK), STEC (STEC) and NetLogic Microsystems (NETL). [Read the full article]

A search for dividend-paying stocks with IBD Composite Ratings of 90 or better showed about half are in the exploration, pipeline, coal or other energy-related businesses.

In some of these, the company has a steady revenue stream. For example, most of El Paso Pipeline Partners’ (EPB) revenue comes from pipeline-use fees that are set by long-term contracts. Its annualized dividend yield is 5.4%.

Other pipeline companies on the screen are Holly Energy Partners (HEP) (yield of 7.8%), Quicksilver Gas Services (KGS) (7.4% yield), Buckeye Group Holdings (BGH) (5.3% yield), and Spectra Energy Partners (SEP) (5.4% yield).

All of these companies are also master limited partnerships. A common energy-industry business model, MLPs pay only limited corporate taxes. In exchange, they must direct a large chunk of cash flow to investor dividends.

El Paso’s earnings are expected to slow sharply in the current quarter, to a 5% gain. But analysts expect a 244% jump in sales. [Read the full article]

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