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Meanwhile, In The Blue-Chip Corporate Bond Market…
Half a trillion. Give or take.
That's how much investment grade credit funds are on track to take in this year.
IG bond funds have enjoyed inflows for 28 consecutive weeks. So, seven months of uninterrupted AUM growth.
As the figure above (from BofA, tallying EPFR data) shows, the pace has decelerated of late, but $7 billion (the influx this week) is plenty healthy.
At the current clip, high grade funds would rake in nearly $440 billion in 2024, a record. And by a mile. The next closest ye
Spread duration is critical. If you are buying in less than 5 years your risk is pretty marginal vs. Us treasury bonds if you are going blue chips. If you buy 4 year paper, in 18 months you are looking at 2 year paper. Even if the spread widens 50 you are not at much risk since you had the yield pick up first and the widening won’t mean much. The market is telling you that it anticipates a relatively soft landing.
The same is not the case for stonks.
The last time I looked at 4-5 year bonds, agencies were competitive with IG corporate and, for taxable accounts, sometimes superior depending on state tax rate. But that was a month ago.
I mean the tax exempt agencies.
The IG/Junk spread is also near historical lows. Yet another reason Fed is so reluctant to hike.