Investors are exiting U.S. bond fund as the Federal Reserve rapidly raises interest rates and cuts its balance sheet, according to Barclays.
U.S. bond funds have endured the worst stretch of sustained outflows since the 2013 “taper tantrum” panic, with roughly $67.8 billion exiting mutual funds and exchange-traded funds already this year, according to Barclays researchers.
A historically bad patch for U.S. fixed income has been met with dramatic bond fund outflows, starting a year ago in November when the Federal Reserve began warning that higher interest rates and a smaller balance sheet would be needed to fight high inflation. However, with bond yields approaching levels last seen during the 2008 financial crisis, last week also saw inflows to short-term government, long-term corporate and high-yield bond funds, according to the Barclays team.
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