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Current surge in The bond Market And Its Complications for the wider markets moving forward - Alldamoney

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Current surge in The bond Market And Its Complications for the wider markets moving forward



Investors are buying more bonds despite record interest rates relative to stocks. The demand for bond funds among investors is on the rise relative to stocks according to J.P. Morgan Chase & Co.’s analysis of global exchange-traded-fund and U.S. domiciled mutual-fund flows going back to 2007.
Last week trading saw the iShares Barclays 20+ Year Treasury Bond ETF (NASDAQ:TLT) closed at $140.08 per share up $1.17 (+0.84%). The TLT gained 16% year-to-date more than doubling the performance of the S&P 500 in the same period.


This could be attributed to the High valuations of U.S. stocks.Although Equity prices are soaring, companies listed on the S&P 500 are on track to post their fifth consecutive quarter of declines. The trailing price-to-earnings ratio for the S&P 500 climbed to 19.5 this week the highest since 2010 .Totally Over $202 billion is been invested into global bond funds whilst about $47billion are been withdrawn  from global equity market this year.
This portrays high investors’ confidence in global growth, lukewarm inflation and the central bank's loose monetary policy being able to spur greater gains in bonds amid lackluster profits and a range of political risks not quite adequate to push the stock market past the current highs.



While the Equity market is confounding everyone’s expectations by reaching new highs most investors are pessimistic of the future of the equity market.While the currently released data show investors keep throwing money into bonds making it more expensive due to higher demand.

And all theses comes amidst high central bank intervention which would have seen the desire for bonds collapsed had it been in the past era thereby pushing yields higher. Nowadays, equities, bonds, and precious metals are all rallying in unison, despite big outflows from equity funds.

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