Investors fled the American bond boxes, but the cabinet may get a rest

However, at the present time, investors have accumulated from American bond boxes in the long run as soon as possible since the first days of Covid-19 epidemic, According to To accounts from Financial times. Total net flows with government debts and companies reached nearly $ 11 billion in the second quarter, foot It has been found using EPFR data, on a blatant contrast from average net flows of about $ 20 billion over the past 12 quarter.

Miguel Laranegier, director of investment for municipal debt in Aberdeen Asset Management, said this money is a small part of the treasury market, which costs $ 28 trillion, but the migration shows that investors have become increasingly reluctant to the long -term American debt.

“Usually, this is due to fiscal policy rather than monetary policy, especially in the end,” he said. luck.

However, it is optimistic about what the proposed organizational changes to the market can do. Meanwhile, other fixed income experts warned of looking out of data, which could be volatile based on the timing of extracts by various institutional investors.

Bill Mirz, head of capital market research in the United States, said in a statement to luck.

Returns are shaken by deficit fears

There is no doubt that the mood among fixed income merchants was rocky. The return on the cabinet for 30 years, which rises with a decrease in the market price for bonds, hiking Top 5.1 % in late May, has reached its highest level since the spring of 2007.

Fears about America Financial outlook It was in the forefront and the center where the Republicans are working to pass a “large and beautiful” bill for President Donald Trump, a non -partisan Congress budget office Estimates It will add $ 2.8 trillion to the federal deficit over the next decade.

The suspended legislation has proven Final straw For Moody’s, which in May became the last three major credit agencies to reduce the United States rating of the highest levels of borrowers. Meanwhile, Goldman Sachs has partially verified the White House suit that high tariff revenues and economic growth from tax cuts will flip debt. But his way remains IncomprehensibleEconomists from the Investment Bank said, as the debt rate is approaching the GDP of America to the highest level in World War II.

Long -term rates were in a large decrease and a largely firm decrease last month. Modern inflation readings have become relatively cold, and may convince investors that they do not need significant compensation for the risk of increasing prices in their returns.

But the revenues rose slightly on Friday afternoon after the Trade Department I mentioned The Federal Reserve’s favorite inflation scale increased last month, as concerns about how tariffs feed their prices remain. The stocks got a brief shock when Trump He said Commercial conversations have been suspended with Canada.

The last fluctuation in Joan Bianco, the largest investment strategy in Bondbloxx Management, has advised customers to avoid long government debts, such as cabinets for 20 and 30 years, all together.

She told luck.

The return of banks

At the present time, insurance companies and pension funds, which have obligations to pay investors over long periods of time, are among the few “natural investors” in these types of securities, Larangiero said.

However, this may change after the Federal Reserve moved this week to enhance banking participation in the treasury market by reducing capital requirements for the main lenders. Industry leaders like Jpmorgan Chase CEO Jimmy Damon Argue The current restrictions, which were established to prevent the repetition of the global financial crisis, are very stressful and prevent banks from providing liquidity during stress times in the market.

Such changes will not be without a precedent, as the Federal Reserve also exempts the secretary and reserves of banks from an account of the so-called supplementary financial lever-which limits the amount of borrowed funds that lenders can use to make investments-after the epidemic.

Larangeiro believes it is a wise step that can make the government borrow less dependent on foreign investors, whose property is from the debts of the United States. Decrease As a share of the total market.

Thomas Urano, co -consultant investment official, agreed that strengthening domestic demand for American debt can compensate for concerns about the market’s ability to absorb the increase in the cabinet.

And he told luck.

And if this change can help make fixed income boring again, investors may return to crawling.