Adam just tweeted out the headline:
- $7.1 billion in outflow
- Largest outflow on record
- Adds to the outflow that’s been seen from high-yield bonds in the past few weeks
Added (via the FT):
- Lipper said redemptions from ETFs accounted for almost 20% of the total
- This is four consecutive weeks of redemptions from junk bonds
- Average spreads on high-yield bonds have widened 73 basis points to 445 bps since the beginning of July (Barclays)
- Average yields jumped almost a full percentage point from a record low of 4.82 per cent in June to touch 5.78 per cent on Thursday
- Junk bonds posted a negative return of 1.3 per cent in July
- Total return on the debt is still up for the year, at 3.81 per cent
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ps. I posted this yesterday: Which central bank governor says he (there’s a clue) sees greater risks of 1930s style crash?
In which I highlighted my favourite part…
A sudden shift in asset prices could happen in a variety of ways, Mr. Rajan said. The most obvious route would be as a result of investors chasing higher yields at a time when they believe central bank policies will protect them against a fall in prices.
“They put the trades on even though they know what will happen as everyone attempt to exit positions at the same time – there will be major market volatility,” said Mr. Rajan.
So … the news from Lipper of record outflows from the high-yield funds is probably good news in a sense. At least some of these guys have their money out …
