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As Short Interest Jumps And Outflows Rise, Bill Blain Warns: “The Amount Of Passive Money Is Scary”
I've said this before and I'll say it again: if you're a retail investor and you're long high yield through popular ETFs, it's probably not a good sign when you see the pros increasingly expressing their own longs via CDS while simultaneously shorting the ETFs you're in.
And that's exactly what looks to be going on in HY right now. No one wants to miss out on the last few basis points of spread compression but at the same time, no one wants to end up getting stuck long in illiquid cash markets
Totally agree ref this BUT think the picture is even bigger — there’s no magic barrier at BBB where the problem starts & finishes; What’s the inflexion point on corporate debt where money flows in / prices increase as opposed to flows out /prices fall? Is it A? AA?
i.e. Does the HY ETF implosion threaten the whole corporate bond market (or at least much more of it than what is defined as HY today)?