Tuesday, November 13, 2012

Corporate Bond Market Still Strong

As an aside, I wrote this piece on Sunday, so the charts do not include price action from Monday or Tuseday.  However, as most charts deal with weekly price movements, this really isn't a problem.

From the Financial Times: 

Investor inflows into bond funds have crossed the $400bn mark this year, underscoring the ravenous appetite for fixed income among pension funds and insurers. 

Bond funds tracked by EPFR Global, a data provider, attracted almost $10bn in the week ending November 7, extending what is a record-breaking year for the asset class. High yield, US and mortgage-backed bond fund inflows have all hit records, and emerging market bond funds are on track to do so. 

“With seven weeks of the year remaining bond funds are collectively well into record setting territory when it comes to attracting fresh money,” the data provider noted in its report. 

Some asset managers and strategists warn that there could be a bubble brewing in bond markets, as yields are pushed continually lower by the hunger for fixed income. 

Above are weekly charts for the Vanguard short (top chart), intermediate (middle) and long term (bottom) ETFs.  Notice they are all very strong.