‘Buyers’ strike’ sees bond ETFs of every tier bleed billions

Russia considers spending billions of wealth funds on infrastructure

Outflows from fixed-income funds are accelerating as traders price in a more aggressive path of monetary policy tightening from the Federal Reserve, with nearly four rate hikes anticipated for 2022. Treasury yields have surged in response, hitting bondholders with losses, roiling equities and sending shockwaves throughout the corporate credit market.

Investors are offloading trade exchanged funds across the fixed-income spectrum in the midst of a wide-ranging debt selloff. The two biggest high return ETFs posted a joined $733 million outflow yesterday, new off their greatest week after week withdrawals since February, as per Bloomberg Intelligence information. Another $43 million left the iShares 20+ Year Treasury Bond ETF (ticker TLT) following last week’s $1.4 billion outpouring – – the greatest since March 2020. And investors pulled $920 million from the iShares iBoxx $ Investment Grade Corporate Bond ETF (LQD).

“Flows tend to be reactionary, and with the Fed minutes creating a hawkish surprise, most folks probably took the opportunity to reduce exposure to fixed income,” said Sameer Samana, Wells Fargo Investment Institute senior global market strategist. “Given that rates haven’t peaked yet, it’s probably too early for flows to reverse, especially since rates are only up about 40 to 50 basis points from recent lows.”

TLT plunged 4% last week in its worst performance in a year, with the biggest high-grade and junk funds also sliding. While TLT, LQD, the iShares iBoxx High Yield Corporate Bond ETF (HYG) and the SPDR Bloomberg High Yield Bond ETF (JNK) have steadied, they’re still down since the start of the year.

Fixed-income ETFs are still hanging onto net inflows of $1.3 billion so far in January, compared to December’s nearly $17 billion haul. However, cash is evaporating quickly: roughly $1.9 billion was pulled from bond funds on Monday, Bloomberg data show.

The rapid recalibration of Fed expectations has created a “buyers’ strike” of sorts across bond funds, according to DataTrek Research co-founder Nicholas Colas. The anxiety is centered on the fate of the Fed’s massive balance sheet, with the central bank set to wrap up its bond purchases in March. The Fed may also start allowing its holdings to start shrinking not long after raising interest rates.

“I think it continues until we get more clarity on Fed balance sheet runoff,” Colas said. “There are enough people who remember the taper tantrum.”

Disclaimer: If you need to edit or update this news from compsmag then kindly contact us Learn more

For Latest News Follow us on Google News


Latest Headlines
  • Show all
  • Trending News
  • Popular By week
COVID UPDATE: CT positivity rate is 9.73% |  Connecticut News
COVID UPDATE: CT positivity rate is 9.73% | Connecticut News
On Thursday, 693,386 COVID-19 cases have been reported since the beginning of the pandemic, which is up 3,036 since Wednesday. Officials say 31,201 tests were ...
Berthoud students raise money for classmates affected by the Marshall fire – Loveland Reporter-Herald
Berthoud students raise money for classmates affected by the Marshall fire – Loveland Reporter-Herald
The Marshall Fire, which was first reported to authorities on Dec. 30, 2021, is the most destructive wildfire in the state’s history. Nearly 1,000 homes were ...
Are you owed money as part of a securities class action lawsuit?
Are you owed money as part of a securities class action lawsuit?
How to Claim Funds from a Class Action Suit Discover: How Much Is Snapchat Worth? Class action suits are important to help ensure that companies operate ...
Fed says bond maturity runoff will be key tool to sink balance sheet
Credit risk gauge rises to 14-month high on Powell comments
While CDX reacted quickly to the Fed’s moves, “the bigger fallout in credit could be to come,” said Dominique Toublan, head of U.S. credit strategy at ...
According to reports, Xbox is working on a Monster Hunter game
According to reports, Xbox is working on a Monster Hunter game
The scoop comes from a reliable industry insider and Gamesbeat reported Jeff Grubb, who revealed that Xbox are looking to add more co-op games but didn’t ...
Second local child dies of COVID-19 |  local news
Second local child dies of COVID-19 | local news
The death comes amid skyrocketing case levels from the fast-spreading omicron variant. Even though deaths among the younger set remain rare, children are ...
Kissht raises Rs 100 cr in funding led by Trifecta Capital, Northern Arc
Kissht raises Rs 100 cr in funding led by Trifecta Capital, Northern Arc
The company will utilise the funds to expand its scale of operations, enhance its product offerings including credit cards for small business/shops and ...
Games for Android are finally making their way to Windows
Games for Android are finally making their way to Windows
Google officially launched beta testing for Android games on Windows a couple of days ago but the service was limited to 12 games in Hong Kong, Taiwan, and ...
Bitcoin, Reverse Crypto After Fed Gains
Bitcoin, Reverse Crypto After Fed Gains
“While Powell did indeed sound dovish at the beginning of the press conference, it seems that he failed to offer enough reassurance to really turn the tide of ...
Nervous markets fold as Powell signals they must go it alone
Nervous markets fold as Powell signals they must go it alone
For bulls, the problems started not with the Fed’s official communique but in Powell’s press conference, when he repeatedly batted away chances to assure ...
Show next
We will be happy to hear your thoughts

Leave a reply

Compsmag - Latest News In Tech and Business
Logo