Volatility Wave Washed Over Credit Markets—Now Another Test
- Spiking Treasury yields signal end of central-bank largesse
- Junk bond funds suffer more than $10 billion weekly outflow
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Corporate bond funds succumbed to rate fears that have gripped stocks to Treasuries.
Investors pulled $14.1 billion from debt funds, the fifth-largest stretch of redemptions in the week through Feb. 14, according to a Bank of America Merrill Lynch report, citing EPFR data. High-yield bonds lost $10.9 billion alone, the second highest outflow on record. As benchmark Treasury yields traded at a four-year high, it shook the foundations of a key support for risk assets -- low rates.