Thursday Midday Color - More Bond Bulls, Hefty Flows
Here's what's piquing my interest so far on a weak day.
More Bond Bulls
We saw on Tuesday that U.S. consumers showed a big jump in expectations that bond yields would drop (prices rise), and that's been a bad bet lately. More evidence comes from a survey we've looked at a few times over the years, from JP Morgan as noted by Bloomberg.
The bank says that their clients are 17% net long Treasuries. That's the highest since June 2016 (that's about the same time consumers had become as confident on the direction of rates as they are now) and 2nd-highest in five years.
That has led to some pretty damning performance in Treasuries, except for just prior to and during the financial crisis.
If we only include dates since the financial crisis ebbed, then we get the following.
It's also a little bit disconcerting that ETF traders have piled into funds like TLT. On an average day during the past month, the fund has taken in more than $100 million.
Flows
The latest data from the Investment Company Institute shows that mutual fund and ETF investors have been pulling a massive about from non-domestic stock funds. The nearly $10 billion outflow ranks 2nd-largest in at least the past 5 years.
They do like bonds, however.
Looking just at ETF flows for the month, precious metals funds saw the largest outflow in almost 2 years. That wasn't much of a contrary indicator in 2013, though.
Perhaps related to them fleeing precious metals, they also see no need for inflation-protected funds. Those ETFs saw an outflow of nearly $1.7 billion in April, the 2nd-largest in 8 years.
We looked at health care a couple weeks ago, with a number of extremes triggering. The sector has bounced since then, but it didn't stop ETF traders from pulling more than $2 billion from health care funds in April. That's the 2nd-most in at least the past 8 years.
Seasonality
As we start a new month, there aren't too many ETFs triggering in the Sentiment & Seasonality screen. The screen highlights any funds that have good historical returns for May and are showing low optimism (in green) or poor historical returns for the month but investors currently show optimism (in red).
In commodities, there are only two funds showing up, OJ and sugar.