SocGen said that cumulative inflows to the asset class over the last seven years total close to $800bn, but this investor appetite has “strongly diminished” with outflows of around $12bn over a rolling four week period being recorded.
The first rate hike by the Federal Reserve since the crisis was the trigger for US bond funds to shed assets faster than any time since mid 2013, the bank said.
US bonds as a class includes a broad range of sub sections of course, and there were differences between various parts of this market.
Inflation-linked bonds were a “noticeable exception” which saw a pickup in inflows. US high yield credit was the “main new culprit” in the outflow picture, SocGen said.
The bank’s asset allocation strategy team noted that high yield being burdened by its exposure to the US shale oil sector with its increasing default rates and risk of illiquidity was the big driver of the outflows.
