As traders turn risk-off in response to escalating trade war tensions, investors have been diving into safety bets like Treasury bonds and related ETFs.
A weekly data compilation by Bank of America Merrill Lynch revealed the third straight week of equity outflows, with redemptions of $7.2 billion, Reuters reports. Meanwhile, bonds recorded the biggest inflows in 12 weeks at $8.1 billion.
“Off to Treasury Island to flee stormy China-U.S. weather,” BAML titled its weekly note, adding that U.S. Treasuries had seen their biggest inflows since January 2016 at $4 billion. “(This) shows investors positioning for lower yields; BAML private client debt allocation is up to 23.3 percent…Treasury inflows are the most visible expression of positioning for risk-off to date.”
In the ETF space, Treasury bond-related ETFs were among the most popular picks of the past week. For example, the iShares Short Treasury Bond ETF (NASDAQ: SHV) attracted $848.8 million in net inflows over the past week while iShares 20+ Year Treasury Bond ETF (NASDAQ: TLT) saw $731.4 million in inflows, iShares 1-3 Year Treasury Bond ETF (NYSEArca: SHY) added $450.8 million, SPDR Barclays 1-3 Month T-Bill (NYSEArca: BIL) brought in $416.3 million and iShares 7-10 Year Treasury Bond ETF (NYSEArca: IEF) experienced $319 million in inflows, according to XTF data.