首页 Review 正文

Trillions of dollars in bonds are at stake when the Fed stops raising rates

海角七号
290 0 0
With U.S. bond yields at their highest levels in more than a decade, asset managers have high hopes for what BlackRock (BLK) calls a once-in-a-generation opportunity in bond markets.

According to their thinking, many investors, such as pension funds and retirement savers, should buy longer-dated bonds to lock in higher yields, spurring large inflows into bond funds. Blackrock, for example, already expects assets under management in its bond exchange traded funds to triple to $2.5tn by 2030.

But there is a problem: these inflows have yet to materialise. The bond-market rout has spooked investors, who seem hesitant to jump in until they are more confident that interest rates will peak.

Investors pulled $78.6bn from Us-Based taxable bond funds in the 12 months to August, according to data from Morningstar. That amount is far less than the nearly $300 billion investors pulled out of stocks over the same period, but even that is a painful figure for asset managers hoping to make a windfall. These companies earn a percentage of the money they manage in fees, so the income these companies receive is affected by market price fluctuations and the amount of money going in and out.

"Investors remain wary of the Fed continuing to raise rates," said Jeff Klingelhofer, co-head of Investment at Thornburg Investment Management, a mutual fund trading platform. "There is a lot of negative sentiment and investor psychological reaction to rising interest rates and they want to stay on the sidelines," he said.

Bond prices and yields move in opposite directions, so the Fed's aggressive rate hikes are behind the sharp fall in bond prices and the sharp rise in yields. This creates opportunities for investors in two ways: yields are at their highest in more than 15 years, and because bonds are paid at full face value when they mature, investors who buy and hold them to maturity can expect prices to rise, barring a default.

Many on Wall Street are touting opportunities in the bond market. It is difficult to decide when to get on the bus. Treasury yields have been moving higher in recent weeks, with the 10-year yield hitting 4.801% on Tuesday, its highest level since 2007. Shares of BlackRock's iShares 20+ Year Treasury Bond ETF have fallen by more than half from their 2020 peak, a huge loss for investors seeking a safe haven in U.S. Treasurys.
"If you're in an environment where bond yields are going up every day, things are a little nasty," said Steve Sosnick, chief strategist at Interactive Brokers. "I don't see a concentrated buying of bonds right now, and not just because bonds are a bit of a falling knife right now. Bonds are on fire and falling prices should generate demand, but we're not seeing that."

Investors seem happy to wait out the bond rout while earning more than 5% in cash-like instruments such as money-market funds; Money market funds have seen record inflows this year. The answer to when or whether investors end up putting their money into longer-duration bond funds has a key impact on the outlook for asset managers.

As the decline in bond prices accelerated over the past two weeks, BlackRock's shares fell sharply, at one point Posting a nine-session losing streak. Blackrock shares have fallen 12% since 2023. These include T. Rowe Price (TROW), State Street Co. (STT), Invesco Ltd, Shares of other publicly traded asset managers, including IVZ and Franklin Resources (BEN), have also fallen, while the S&P 500 is still up 10%.

Blackrock is scheduled to report quarterly results next week, and investors will be listening carefully for what executives expect from the company about fixed-income fund flows. The company is the world's largest asset manager and provider of bond funds. On last quarter's earnings call, BlackRock president and co-founder Rob Kapito called the potential fixed income flows a "once-in-a-decade opportunity."

"There is finally money to be made in fixed income and we expect demand to recover," Mr Kapito said in July. He also said that about $7 trillion of money in the money market is ready to flood into fixed income when people think interest rates have peaked.

Analysts at Morgan Stanley (MS) still expect a significant reallocation into bonds to support BlackRock's share price in the coming quarters.

"When you do get confirmation and clarification that the Fed is done raising rates, we expect to see more large inflows into fixed income," said Morgan Stanley analyst Michael Cyprys.
While there hasn't been a major flow of money, Charles Schwab's asset-management division has been flooded with calls from interested clients.

"More and more investors are asking us, 'How can we lock in this rate for the foreseeable future? 'said David Botset, head of equity product management and innovation at Charles Schwab. "What's happened in the last few weeks does make some people nervous that maybe we haven't reached the top yet."
CandyLake.com 系信息发布平台,仅提供信息存储空间服务。
声明:该文观点仅代表作者本人,本文不代表CandyLake.com立场,且不构成建议,请谨慎对待。
您需要登录后才可以回帖 登录 | 立即注册

本版积分规则

  •   苹果知名分析师郭明錤周四(10月31日)在社交媒体上发文表示,苹果明年可能会减少对芯片制造商博通Wi-Fi芯片的依赖,并推出自己的处理器。   郭明錤在社交媒体平台X上写道,“在2025年下半年的新产品(例如iPh ...
    uturn
    昨天 14:42
    支持
    反对
    回复
    收藏
  •   10月30日,小鹏汽车生态企业小鹏汇天宣布,旗下分体式飞行汽车“陆地航母”即将亮相2024中国航展,11月12日将在中国航展第二展区(斗门莲洲)进行全球首次公开飞行,同时“陆地航母”也将在珠海国际航展中心8号 ...
    yxtianyouyou
    前天 11:43
    支持
    反对
    回复
    收藏
  •   交易所监管文件显示,当地时间11月1日,亚马逊创始人杰夫·贝索斯拟出售约1635万股亚马逊股票,预计套现约30.5亿美元。今年7月,贝索斯已申请额外出售约2500万股亚马逊股票,按当时股价计算可套现约50亿美元。 ...
    blueskybb
    6 小时前
    支持
    反对
    回复
    收藏
  •   近日,凯撒海湾目的地(山东)运营管理有限责任公司(简称“凯撒海湾”)与携程旅悦集团签署战略合作协议,双方将围绕“海上目的地运营”、“旅游产品与服务创新”、“研学旅行”、“日韩及海外旅游市场开拓”等 ...
    llyyy2008
    5 小时前
    支持
    反对
    回复
    收藏
海角七号 注册会员
  • 粉丝

    0

  • 关注

    1

  • 主题

    29