S&P 500, Oil, Bond Fund Flows Amid Recovery-Fueled Rise in Yields
2021-03-03 16:00:00
Izaac Brook,
S&P 500, Oil, Bonds Fund Flows Talking Points:
S&P500-Linked SPY ETF Flows Have Been Mixed Amidst Rise in Yields.
Stall in WTI Rally Sees a Continuation in Outflows from Oil ETF USO.
Moves in US Yields Have Mixed Impact on Corporate and Treasury Bond ETFs.
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S&P 500, Oil, Bond Fund Flows Amid Recovery-Fueled Rise in Yields
Late February’s rise in US Treasury bond yields has had knock-on effects across financial markets. Longer-term yields in other developed countries rose in a similar pattern and equity markets moved to reflect the increasing risk free rate of return.
With Investors Piling Into Risky Debt, Yields Are Dropping Even Further February 10, 2021
Rates were at bottom-of-the-barrel lows during much of 2020, causing a voracious appetite for yield. This caused fixed income investors to pile into risky debt, and is now dropping yields further.
In the current market landscape, Treasury yields are starting to head higher. This, in turn, could cause a flight from riskier debt and back into more safe haven government debt.
In the meantime, the average yield on risky debt is starting to head lower.
“The average yield on U.S. junk bonds dropped below 4% for the first time ever as investors seeking a haven from ultra-low interest rates keep piling into an asset class historically known for its high yields,” a Bloomberg article noted. “The measure for the Bloomberg Barclays U.S. Corporate High-Yield index dipped to 3.96% on Monday evening, making it six straight sessions of declines.”