Capital flows showed a “bond massacre” is underway, with the largest weekly outflow from bond funds in 18 months, according to Bank of America Merrill Lynch.
Money has been rushing into risky assets shortly before the European Central Bank starts its quantitative easing program, data from the latest capital flows surveys showed.
By Antonia Oprita
Talk of inflation may seem absurd right now, when everybody worries about deflation. But is this actually the calm before the storm?
Fancy paying for the privilege of lending money to a company? You will soon have the chance to do so. In fact, some investors already saw negative yields for corporate bonds.
“Equity vigilantes” may be trying to push the S&P 500 lower in the coming weeks just to force the Federal Reserve to stay dovish, analysts at Bank of America Merrill Lynch have warned in their most recent report on capital flows.
The data shows that money left US equities for the fourth straight week, with outflows totalling $3.3 billion last week.
By Antonia Oprita
With elections in Greece stealing the show, investors would do well to keep an eye on the weakening euro and the strengthening dollar.
The re-balancing of the exchange rates of the world’s two main reserve currencies could have painful consequences for many countries and markets.
Tuesday’s sharp drop in global stock markets doesn’t make much sense taken in isolation. But the warning signs had been accumulating for a while.
The key question is: is this the beginning of the end of the bull market, or is it just another wobble?
It is official: this was the worst year for high yield bonds in the past 10 years.
Outflows totalling $8.6 billion year-to-date exceed the $6.2 of outflows from high yield bonds in 2011, when the eurozone was in full swing, analysts at Bank of America Merrill Lynch noted in their weekly report.