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In High Yield: Exodus

|Includes: iShares iBoxx $ High Yield Corporate Bond ETF (HYG), JNK

Well, we’ve reached that listless holiday nadir when even Bloomberg has run out of stuff to talk about and so you get the exceedingly rare “paid programming” on BBG TV. Right now, it’s a fun TIME Life add for a “Golden Oldies” album.

I’ve got a longer piece coming out elsewhere later today (hopefully) on this subject so I won’t get too deep in the weeds with it here, but in light of the post we ran here earlier on the extent to which, as Deutsche Bank puts it, “the next nexus of risk is the credit space,” I wanted to draw your attention to a pretty incredible chart from BofAML.

As noted in the piece linked above, outflows from corporate credit ETFs, and particularly from HY vehicles, have the potential to feed back into the source where the source is a VIX spike. 

[...]

Given that, it’s worth noting that we have just witnessed nothing short of a historic outflow from HY. Consider this from BofAML:

US HY funds experienced a $6.3bn (-2.9%) net outflow last week, their 2nd largest of alltime behind only August 6, 2014’s -$6.75bn (-3.15%).

Full post here:

https://heisenbergreport.com/2018/02/19/in-high-yield-exodus/