Investors are pulling out of bonds at a record rate not seen in two years, and related shares and exchange traded funds (ETFs) are not immune to this retreat. The latest uptick in interest rates and decrease in price has bond investors pulling out at a rapid clip. Part of the latest sell-off may also be a result of end of the year portfolio balancing and profit taking. David Pitt for Associated Press reports there was a net outflow of $8.62 billion in the week ended Dec. 15 was witnessed, according to the Investment Company Institute. [Should We Be Worried About Treasury ETFs?]
Last week marked the fourth time in the last five weeks that bond flows were negative. Other trends in the bond market include: [Treasury ETF Holders Need A Wake Up Call.]
- 10-year Treasury notes are headed for the longest streak of weekly losses in 19 months.
- Five-year notes declined as concern about the Federal Reserve policies has caused inflationary fears and taken the life out of fixed income assets. Lukyano Mnyanda and Wes Goodman for Bloomberg on Yahoo Finance reports that yields indicate traders are adding to bets inflation will quicken as the economic outlook improves.
- Treasuries handed investors a 2.1% loss this month, according to Bank of America Merrill Lynch indexes. The last time U.S. sovereign debt fell more in a month was in December 2009, when it dropped 2.6%.
- Matthew Craft for Associated Press reports that Americans are leaving bond mutual funds at the fastest rate in more than two years, as $8.6 billion was pulled out of bond funds a few weeks back. As the prospect of cheap credit is dwindling, the rise in interest rates risk a stand still in lending across the board.
For more stories about bonds, visit our Bond ETF category.
Tisha Guerrero contributed to this article.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.