- Investors pulled more than $18B from from bond mutual funds and ETFs in the one week following last November's election - the largest one-week exit in more than three years. Over the next five weeks, they yanked an additional $22B.
- At issue was the idea that better economic growth - and alongside, perkier inflation - were on the way.
- It turned out to be a temporary blip, write Ben Eisen, Chris Dieterich, and Sam Goldfarb in the WSJ. More than $112B has been pumped back into fixed-income funds since January 1, and the benchmark 10-year Treasury yield touched 2.28% on Friday, its lowest level since shortly after the election.
- Emerging market companies and governments have been happy to oblige, selling $178.5B of dollar-denominated debt in Q1, the highest quarterly amount ever.
- U.S. corporates were happy to oblige as well, with high-grade credits selling a record $414.5B of paper in Q1. Junk-rated issuers sold $178.5B, double the amount in Q1 one year ago.
- Name your excuse, but the Journal writers suggest the strong appetite for bonds shows investors unable to shake years-old assumptions about an economy able to do little more than muddle along.
- "The old trade has worked really well, so you need overwhelming evidence before people will abandon something that has worked,” says Mohamed El-Erian, who helped coin the term the "new normal," to describe lame post-crisis economic growth. Bond buyers beware ... El-Erian says the that period is coming to an end.
- ETFs: AGG, BND, BOND, PTY, RCS, DBL, BTZ, SCHZ, PCM, JHI, BHK, BNDS, JMM, TAI, INC, ICB, FBND, VBF, PAI, IUSB, SAGG, GBF, VBND, GTO, AGGE, AGGP, AGGY, DWFI, UBND
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