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Record Bond Fund Redemptions Echo Capitulation Lows In 2008

Tyler Durden's picture





 

Bond Funds saw a a massive $23bn of redepmtions in the latest week - a record in absolute terms. The outflows were across every segment of the fixed income market and are second only (in %of AUM) to the capitulative collapse that occurred after the October 2008 plunges (after which Treasuries rallied 5% in 6 weeks). The past 4 weeks have seen an unprecedented $58bn of outflows. All of this is providiung fodder for the mainstream media (and several hopeful strategists) that the great rotation 'must' have started. However, as BofAML notes, there were $13.1 billion of outflows from equity funds (including $6.7 billion from pure long-only funds) - the most since late April. It appears the money that has been 'rotated' into stocks from money-market funds has merely reverted back into these safe-havens - another reason why the powers that be would like to drastically reduce the access to these liquidity-sapping investment vehicles to keep the sheep in risk assets.

Bond Redemption hit a record hit (in absolute terms) and 2nd largest ever in AUM terms...

 

This was also a record week for Global HY outflows helped by the -$3.7bn outflows from non-US domiciled funds, their highest so far. US IG funds posted their highest dollar outflow on record (highest percentage outflow since 2009), coming in at -$5bn, which eroded 0.7% from their AUM.

Loans and Money Market funds were the only two asset classes reporting inflows, coming in at +$1bn and +$5.5bn respectively.

 

Charts: BofAML

 


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Fri, 06/28/2013 - 09:08 | Link to Comment SheepDog-One
SheepDog-One's picture

HEY settle down out there! We were just JOKING about 'the tapers'! 

Fri, 06/28/2013 - 09:17 | Link to Comment Hippocratic Oaf
Hippocratic Oaf's picture

Someone posted a few days ago that Ben wanted to show thu prez who's boss after the comments made that maybe he's over-stayed his position.

Is this Bens way of getting back at him?

One mans mouth should not cause such a sell-off.

Welcome to the new normal.

Fri, 06/28/2013 - 09:27 | Link to Comment Cdad
Cdad's picture

Equity outflows?  How is this possible?  Do you mean to tell me that Average Joes everywhere are not rushing in to buy stocks which can [and do], in any given hour, collapse 20% in computerized style because of a headline that is out of sync with some criminal syndicate Wall Street analysts perception of things?  I refuse to believe this.

Do you mean to tell me that markets, which can reprice by 2% on any given day due to something Ben Bernanke says, are seeing outflows?  You are telling me that fascism isn't seeing inflows?

What's next?  People buying gold?

Just stunned at this turn of the screw. 

 

Fri, 06/28/2013 - 09:20 | Link to Comment buzzsaw99
buzzsaw99's picture

Did we say taper? What we meant to say is that we'll be buying stocks too before the end of the year.

Fri, 06/28/2013 - 19:36 | Link to Comment StychoKiller
StychoKiller's picture

Don't know what they eat, but why couldn't it be banksters?

Fri, 06/28/2013 - 09:08 | Link to Comment ekm
ekm's picture

Margin call and collateral call

 

In reality, the Fed was printing money and Primary Dealers were printing Leverage...........until collateral and margin calls

 

This is going down, inevitable

Fri, 06/28/2013 - 09:15 | Link to Comment fonzannoon
fonzannoon's picture

It's windowdressing. Same as stocks. If you knew your clients were going to see an asswhooping on their quarterly statement and say "why are we in bonds when everyone knows interest rates are rising"...you sell your bonds prior to the end of quarter to avoid looking stupid. Those who did not will probably be selling next week.

Fri, 06/28/2013 - 09:36 | Link to Comment disabledvet
disabledvet's picture

sell bonds? sell equities...but debt? this seems like a CLEAR panic trade. somebody (HUGE) is massively over leveraged and has to sell treasuries in order to meet something "a lot bigger than a margin call." (I think it's called a Capital Call actually. more than likely a huge mining conglomerate and the State that backs him.) again..."be fearful when others are greedy...bu greedy when others are fearful." treasuries look like a huge buy to me...but if you're new here I'd wait until "the Mother of All Hairballs" gets coughed up.

Fri, 06/28/2013 - 09:41 | Link to Comment ekm
ekm's picture

COLLATERAL CALL

Fri, 06/28/2013 - 09:54 | Link to Comment Quinvarius
Quinvarius's picture

Probably JPM since they are now unhedged without their 100 billion whale trade.  LOL.

Fri, 06/28/2013 - 09:08 | Link to Comment ParkAveFlasher
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Deep, liquid pools

Fri, 06/28/2013 - 09:09 | Link to Comment vote_libertaria...
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A question...did the banks/hedge funds buy them to prevent a collapse?

 

Now they are sweating it out?

Fri, 06/28/2013 - 09:39 | Link to Comment disabledvet
disabledvet's picture

hedge funds have been spectacular under performers since QE was begun. you telling me they're not massively over leveraged in the commodity space too?

Fri, 06/28/2013 - 09:09 | Link to Comment SheepDog-One
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'Money Market funds'...pffft whatever, got to be the biggest suckers ever born.

Fri, 06/28/2013 - 09:40 | Link to Comment disabledvet
disabledvet's picture

even better...

Fri, 06/28/2013 - 09:09 | Link to Comment Dr. Engali
Dr. Engali's picture

Margin calls bitchez! Give us your gold and your cash, preferably your gold.

Fri, 06/28/2013 - 09:12 | Link to Comment ekm
ekm's picture

it's a collateral based system

 

The entities owning collateral can call it back at any time

Also, Fed can print money only by buying and removing collateral.

Fri, 06/28/2013 - 09:44 | Link to Comment Bastiat
Bastiat's picture

Calling back collateral wouldn't be such an issue if the collateral were not rehypothecated multiple times!  This is the corrupt heart of the banking system.

Fri, 06/28/2013 - 09:13 | Link to Comment Bearwagon
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It's slowly becoming a habit of mine to upvote you just for raising our battlecry  ;-)

Fri, 06/28/2013 - 09:16 | Link to Comment fonzannoon
fonzannoon's picture

I don't think it's margin calls Doc, I think it's window dressing. I think we are all being way too optomistic.

Fri, 06/28/2013 - 09:25 | Link to Comment Dr. Engali
Dr. Engali's picture

The window dressing is the rally we are seeing now after the Bernank's bond massacre. His attempt to remove the froth from the market went a little too far. IMHO. Personally I think they have come to the point where they are tring to manage irrational exuberance on a daily basis.The market sells off a little too hard send a hawk out with dovish comments. If the market gets too hot send a dove out with hawkish comments. It's a pathetic system.

Fri, 06/28/2013 - 09:26 | Link to Comment fonzannoon
fonzannoon's picture

agreed

Fri, 06/28/2013 - 09:42 | Link to Comment disabledvet
disabledvet's picture

TRAIN WRECK!

Fri, 06/28/2013 - 11:58 | Link to Comment moneybots
moneybots's picture

It's not the comments that matter, but the liquidity.  When Greenspan warned of irrational exuberance, the market hiccupped then went about its ramping of prices, as Greenspan did nothing.

Fri, 06/28/2013 - 09:11 | Link to Comment chubbyjjfong
chubbyjjfong's picture

Massive asset revaluation.  Rotation from all asset classes into cash.  Deflationary sentiment shift.  What will be the next trigger for momentum to continue?

Fri, 06/28/2013 - 09:13 | Link to Comment ekm
ekm's picture

Collateral shortage and collateral and margin calls

Fri, 06/28/2013 - 09:19 | Link to Comment chubbyjjfong
chubbyjjfong's picture

+1 Faith is starting to turn.  Paper promises are not going to cut it anymore.  Hard assets or nothing.  So many asset classes leveraged to the edge.  Might not take much now to push another over.  Stocks will need something larger though.

Fri, 06/28/2013 - 09:30 | Link to Comment chubbyjjfong
chubbyjjfong's picture

In this sham of a market, I'm not even sure that you can class stocks as assets anymore.  Assets can become liabilities in the blink of an eye.

Fri, 06/28/2013 - 10:26 | Link to Comment new game
new game's picture

and the collateral is deflating due to the cycle of needing-basic supply and demand with a void in faith...

Fri, 06/28/2013 - 09:16 | Link to Comment The Master
The Master's picture

Oil prices are keeping equities in check.  Look for consumer discretionary stocks to get hit hard next few months.

Fri, 06/28/2013 - 09:17 | Link to Comment fonzannoon
fonzannoon's picture

Master if we were not so far along into the recovery i'd agree with you. But since things are so fucking awesome, consumer discretionary has to be where it's at, no?

Fri, 06/28/2013 - 09:27 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

GDP 1.77% for Q1.  Q2 will come in south of 2% according to latest projections, and the Sequester's DoD furloughs don't start until next week, which is Q3.

Lower GDP growth bespeaks continued decline in US oil consumption.  Ditto China and their GDP growth fall.

So amid the story of abundance, how can prices be up?  Answer: Maybe someone needs to look more carefully at the story of abundance.

Fri, 06/28/2013 - 09:39 | Link to Comment ekm
ekm's picture

stored oil to be used as a financial collateral, hence removed from consumtion and stored

Fri, 06/28/2013 - 09:45 | Link to Comment CrashisOptimistic
CrashisOptimistic's picture

It's been stored for 80 million years.

No need to move it to store it.

Fri, 06/28/2013 - 09:47 | Link to Comment disabledvet
disabledvet's picture

oil? really? it's produced everywhere and can be shipped for free. "source of liquidity" not "Angel of Death." plus you have distillates, natural gas, compressed air, solar, nuclear power. there are no shortages at all here...save for an economic recovery. how does bankrupting New York City solve that?

Fri, 06/28/2013 - 10:12 | Link to Comment Non Passaran
Non Passaran's picture

How many days until collapse, ekm? :-)
Should be next week, correct?

Fri, 06/28/2013 - 10:18 | Link to Comment ekm
ekm's picture

You forget the entertainment side of it.

 

you're too serious. Posting is for free and you can easily what i say

Fri, 06/28/2013 - 10:20 | Link to Comment fonzannoon
fonzannoon's picture

I knew you were Graham Summers this whole time.

Fri, 06/28/2013 - 10:29 | Link to Comment new game
new game's picture

lol - hey the shit-show is getting closer to the main plot - control of everything you do and live for...

Fri, 06/28/2013 - 10:38 | Link to Comment ekm
ekm's picture

next week is going down

Fri, 06/28/2013 - 11:12 | Link to Comment fonzannoon
fonzannoon's picture

and if not then definitely the week after.

Fri, 06/28/2013 - 11:45 | Link to Comment ekm
ekm's picture

On a serious note, seeing how Dow is acting up, it's clear it's hanging on a thread with is getting thinner and thinner

 

But again, oil has been hanging on a simmilar thread for months already

Fri, 06/28/2013 - 12:16 | Link to Comment fonzannoon
fonzannoon's picture

months?

Fri, 06/28/2013 - 09:14 | Link to Comment highcapacity
highcapacity's picture

Beni Boy announcing tapering ......

http://www.youtube.com/watch?v=G1k1tW0Rb7s

Fri, 06/28/2013 - 09:18 | Link to Comment timbo_em
timbo_em's picture

Cash is King! Good luck to all the muppets out there who still think this is a rotation.

Fri, 06/28/2013 - 09:21 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Time for some audio Jim Willie so I can be scared shitless the whole weekend.

http://www.youtube.com/watch?v=A2WlpdIt7Hg

Fri, 06/28/2013 - 09:39 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

thanks for sharing !!

Fri, 06/28/2013 - 09:32 | Link to Comment Judge Crater
Judge Crater's picture

Nice charts.  One explanation is that investors are cashing out assets to get ready money to pay for their summer rentals in the Hamptons.  You are not anybody unless you can take off all of August (and most of July) for your summer vacation among the ritzy set.  Another explanation is that big investors are bailing out and putting the bricks of $100 bills into safety deposit boxes or under their mattress, flight capital.  The best explanation is that people are tapping out, living costs outrunning income.  So whatever is in the piggy bank gets taken out to cover expenses.

Fri, 06/28/2013 - 09:44 | Link to Comment MyBrothersKeeper
MyBrothersKeeper's picture

Anybody who thought the outgoing bond money was going into stocks is on crack....especially since stocks were losing as well. I'll bet almost all went into cash since stocks, bonds (all durations), metals etc all got hit.  Notice how bonds have recovered the last few days...reflective of refows.

Fri, 06/28/2013 - 09:53 | Link to Comment disabledvet
disabledvet's picture

we've just had a MASSIVE across the board tax increase in the form of higher rates...caused by the Fed with nothing to do with prices or "excesses in the system." indeed prices are FALLING. the value of cash has clearly soared...and with it the dollar. "this was a surprise." obviously not the approach I would have used but hey "why not throw your State under the bus in the name of the Bank of Fargo."

Fri, 06/28/2013 - 10:04 | Link to Comment Never One Roach
Never One Roach's picture

Seems like alot of investors suddenly need cashola.

 

And as the post above says, the rate increase is a huge drag on the economy, not to mention recent increases in property taxes, postal rate  increases, internet sales taxes...and so on.

Fri, 06/28/2013 - 10:18 | Link to Comment Quinvarius
Quinvarius's picture

Or the bond bubble is just falling apart.

Fri, 06/28/2013 - 10:20 | Link to Comment sudzee
sudzee's picture

Smart money ain't going to wait and get crushed in a mad exodus in the trillions. FED pulling out all stops to slow the flow but its pretty obvious after a 30 year bull market rates must rise. QE99 going to have to be enormous.

Fri, 06/28/2013 - 10:40 | Link to Comment sudzee
sudzee's picture

Ota bonds into physical PM's. Whatsa JPM to do.

Fri, 06/28/2013 - 10:52 | Link to Comment Levadiakos
Levadiakos's picture

Did Whitney issue a "sell"?

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