Star News

For a second straight week, Japan's 20-year bonds rose, as signs of a global economic slowdown boosted demand for the safety of government debt. Twenty-year yields dropped to the lowest level since September 2003 after U.S. reports on consumer spending, home sales, and factory orders signaled the world's largest economy is losing momentum. Bonds also rallied as the yen's gain to an 8-month high threatened to accelerate deflation. Ten-year bonds ended the week unchanged after yields dropped below 1% for the first time since 2003.

At Japan Bond Trading Co., the country's largest interdealer debt broker, the yield on the 1.8% bond, due in June 2030, fell 3 basis points this week, to 1.71%. Thirty-year yields dropped 4.5 basis points to 1.73%. Benchmark 10-year yields closed at 1.055%, while bond futures for September delivery rose 0.03 to 141.87 at the Tokyo Stock Exchange. Ten-year yields dropped to 0.995% on August 4th, the lowest in 7 years.

Reports on July 30th showed Japan's unemployment rate unexpectedly rose for a 4th month, and industrial production fell at its most significant level in a year. The nation's economic growth slowed to an annual 2.1% pace in the 2nd quarter, from a level of 5% in the previous quarter. Investors expect consumer prices to drop an average 1.1% per year over the next 5 years, according to Japanese breakeven rates, or, the yield differential between conventional and inflation-protected bonds. We will keep you posted…

Non-Recourse Anchored Shopping Center: 4.75% for 10 Years

Penstar obtained a fixed rate quote of 4.75% for the refinance of an anchored Southern California shopping center. The 10-year term is offered on a fully occupied center, anchored by a nationwide grocery and drug chain. The borrower chose a 10-year amortization versus the 25-year option initially offered by the lender, so the loan will self-liquidate and the property will be free and clear of debt at the end of the loan term. To learn more, please contact Steven Hamermesh at (818) 883-9609 or hamer@penstaradvisors.com.

Helpful Humor

An elderly gentleman walked into a local jewelry store early on a Friday evening, with a beautiful, noticeably younger woman on his arm. He explained to the jeweler that he was looking for a special ring for his girlfriend. The jeweler examined his inventory and presented the man with a $5,000 ring. The old man hesitated and said, “No; I'd like to see something more special.”

The jeweler promptly turned to his special stock and presented an extravagant ring, priced at $40,000. The young woman's eyes sparkled, her body trembling with excitement. “We'll take it.” declared the elder customer.

The jeweler inquired how payment would be made and the man responded, “By personal check.” “I know you need to ensure that my check is good; you can call the bank Monday to verify the funds.” the old man explained; “and I will pick up the ring Monday afternoon.”

Monday morning, the jeweler was very agitated when he contacted the customer. “I contacted your bank and they confirmed that there are no funds in your account.”

“I know!” said the old man. “But,” he continued, “let me tell you about my great weekend!”'