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relates to Take a Peek on the ECB's 38th Floor as Philip Lane Awaits Role relates to Bond Traders Are About to Get a Big Update on Fed's Portfolio relates to ECB Moves Closer to Global Dovish Shift as Coeure Mulls Loans relates to Emerging Markets Retreat Amid Global Growth Concerns: EM Review relates to Fed Will Probably Change Its Approach to Inflation, Dudley Says relates to Pemex Assistance Plan Fails to Impress Bondholders relates to Hedge Funds See Windfall From Bets on Puerto Rico After Storm relates to Fed’s Clarida Watches a Price Gauge That Just Tied a Record Low relates to Surprise! Refinancing Complex Debt Instruments Is Hard relates to Duterte Signs Bills to Ease Inflation, Boost Central Bank Powers
relates to Take a Peek on the ECB's 38th Floor as Philip Lane Awaits Role relates to Bond Traders Are About to Get a Big Update on Fed's Portfolio relates to ECB Moves Closer to Global Dovish Shift as Coeure Mulls Loans relates to Emerging Markets Retreat Amid Global Growth Concerns: EM Review relates to Fed Will Probably Change Its Approach to Inflation, Dudley Says relates to Pemex Assistance Plan Fails to Impress Bondholders relates to Hedge Funds See Windfall From Bets on Puerto Rico After Storm relates to Fed’s Clarida Watches a Price Gauge That Just Tied a Record Low relates to Surprise! Refinancing Complex Debt Instruments Is Hard
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Investors Hedge a Stock Doomsday With Record Fixed-Income Inflows

Investors Hedge a Stock Doomsday With Record Fixed-Income Inflows

  • Highest ever three-month trailing flows into debt funds: SSGA
  • German bond yields at two-year low show appetite for havens
U.S. Recession 'Clearly' a Near-Term Risk, Says Janus Henderson's Maris

Investors are amassing an expensive insurance policy against market doomsday.

Confident that fragile economies will keep monetary policy makers in dovish straight-jackets, they poured another $490 million into the iShares 20+ Year Treasury Bond ETF last week -- bringing its year-to-date inflow to a record $2.3 billion.

That stocks will suffer as a result of this brittle growth outlook has also helped push three-month trailing inflows into fixed-income ETFs to the highest on record through end-January, according to State Street Global Advisors.

BlackRock's long-term Treasury ETF assets climb to record

“Fears of worsening economic momentum coupled with geopolitical uncertainties and corporate earnings revisions that appear to have limited upside has triggered a rush for safety,” said Antoine Lesne, head of SPDR ETF Strategy & Research for Europe at State Street Global Advisors. “Fixed income is thus a good place to be relative to higher potential drawdowns in equity portfolio.”

After climbing up along with stocks, Treasury yields reversed course mid-January, signalling the bond market is prepping for slower growth and inflation.

A rally in German bonds pushed benchmark 10-year yields below 0.1 percent Monday morning to a two-year low on the heels of dimming economic projections.

Investors have added $18.4 billion into U.S.-listed fixed-income funds this year, nearly as much as they’ve pulled from equity funds -- $18.9 billion -- according to data compiled by Bloomberg. Though some of those outflows may be down to tax-loss harvesting, it’s the most lopsided relationship between the two asset classes since 2016.

Bond Bid

Fixed-income ETF flows are outpacing equities by the most since 2016

Source: Bloomberg Intelligence

Note: Shows U.S.-listed flows for Jan-Feb of each year. 2019 through Feb. 8

Bonds aren’t rejecting risk altogether, of course: Strong inflows into U.S. high-yield credit persist, even though high corporate debt loads look vulnerable in an economic slowdown.