The correlation between oil and high-yield bond indexes is very high. Where oil goes, high-yield bonds follow.
The three-month Volatility Index (or VIX), which measures the implied volatility of options on the S&P 500 stock market index, is approaching record lows.
The surge of inflows into junk bonds indicates that the fear of recession in the US economy has faded, which has boosted investor confidence.
Led by improvements in production-related indicators, the Chicago Fed National Activity Index (or CFNAI) rose to +0.27 in July from +0.05 in June.
Yields on high-yield debt (HYG) (JNK) and spreads between high-yield debt and Treasuries both fell over the last year.
The global hunt for returns has turned US junk bonds into an attractive investment option.
Inflows into emerging market equity ETFs keep on dominating the inflow picture within our country ETF universe.
US GICS Sector ETFs witnessed aggregate net inflows of ~$800 million last week
Analyzing last week’s most significant ETF inflows in the context of our entire ETF universe, we note that investors continued to move capital into emerging markets.
How quickly things can change! Investor sentiment started to feel a little shaky last week.
Cumulative net flows into SPDR’s S&P 500 ETF Trust (SPY) reached a YTD (year-to-date) high last Monday. However, inflows reversed sharply.
Those who recognized the upside potential in emerging market equities in early 2016 are likely already in the “hangover stage” of celebrating sizable YTD (year-to-date) returns.
It’s a fact that investors buy into GLD when equity markets turn lower in times of elevated uncertainty.
As we hinted at in Part 2 of this series, market participants seem to become more comfortable as major equity index ETFs rose to highs last Thursday.
The optimism among US equity bulls is simply remarkable, reflecting both in ETF performance and fund flows.
YTD (year-to-date) asset inflows into emerging market equity ETFs have been remarkably broad.
The upside reversal in emerging market equity ETFs has become one of the most remarkable investment themes in 2016. Investors don’t want to miss out.
In the current low-yield environment and with US equities at extremes, investors are trying to boost returns by reallocating capital into the most cost-efficient ETFs.
US GICS sector ETFs witnessed net outflows for the second week. In aggregate, investors pulled out ~$400 million. Last week, the flows were concentrated.
QQQ outperformed SPY since the end of June. Investors piled ~$1.6 billion of capital into the tech ETF. SPY’s rallies are an opportunity to unload holdings.