{"id":31120,"date":"2018-02-17T08:38:32","date_gmt":"2018-02-17T13:38:32","guid":{"rendered":"http:\/\/olduvai.ca\/?p=31120"},"modified":"2018-02-17T08:38:32","modified_gmt":"2018-02-17T13:38:32","slug":"weekly-commentary-permanent-market-support-operations","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=31120","title":{"rendered":"Weekly Commentary: Permanent Market Support Operations"},"content":{"rendered":"

Weekly Commentary: Permanent Market Support Operations<\/a>\u00a0<\/span><\/h3>\n
U.S. stocks posted the strongest week of gains since 2013 (would have been 2011 if not for late-day selling). The S&P500 surged 4.3%, and the Nasdaq Composite jumped 5.3%. The small cap Russell 2000 rallied 4.4%. After closing last Friday at 29.06, the VIX settled back down to a still elevated 19.46. Foreign markets recovered as well. Germany\u2019s DAX rose 2.8%, and France\u2019s CAC 40 gained 4.0%. The Shanghai Composite was closed for the lunar new year. The dollar index was back under pressure this week, sinking 1.5%, giving a boost to commodities prices. Price instability abounds.<\/p>\n

While stocks rather quickly recovered a chunk of recent losses, the same cannot be said for corporate bonds. Notably, investment-grade bonds (LQD) rallied little after recent declines.<\/p>\n

February 16 \u2013 Bloomberg (Cecile Gutscher and Cormac Mullen): \u201cCorporate 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. \u2018Investors don\u2019t sell their cash bonds in a big way until they are forced to, which happens when the outflows start picking up more sustainably,\u2019 Morgan Stanley strategists led by Adam Richmond wrote\u2026\u201d<\/p>\n

U.S. junk bond funds suffered outflows of $6.3 billion (from Lipper), the second highest ever. IShares\u2019 high-yield ETF saw outflows of $760 million. U.S. investment-grade bond funds had outflows of $790 million (Lipper), the first outflows since September. This was a big reversal from last week\u2019s $4.73 billion inflow. The iShares investment-grade ETF had outflows of $921 million, the \u201clargest outflow in its 15-year history.\u201d Even muni funds posted outflows ($443 million), along with mortgage and loan funds.
\n…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Weekly Commentary: Permanent Market Support Operations\u00a0 U.S. stocks posted the strongest week of gains since 2013 (would have been 2011 if not for late-day selling). The S&P500 surged 4.3%, and the Nasdaq Composite jumped 5.3%. The small cap Russell 2000 rallied 4.4%. After closing last Friday at 29.06, the VIX settled back down to a […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[7756,18630,5024,2442,18631],"class_list":["post-31120","post","type-post","status-publish","format-standard","hentry","category-economics","tag-credit-bubble-bulletin","tag-market-support-operations","tag-us-equities","tag-us-stock-market","tag-vis"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31120","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=31120"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31120\/revisions"}],"predecessor-version":[{"id":31121,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/31120\/revisions\/31121"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=31120"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=31120"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=31120"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}