Bond selloff creates risk of liquidating world’s busiest trades: BofA

LONDONSep 23 – Global government bond losses are headed for the worst year since 1949, and this year’s public debt slump threatens credit events and a sell-off of the world’s busiest trades, BofA said in a note on Friday.

Bond funds posted outflows of $6.9 billion in the week to Wednesday, while $7.8 billion was withdrawn from equity funds and investors poured $30.3 billion in cash, BofA said in a research note. which cites data from EPFR.

BofA added that investors face further hits from inflation, interest rates and the recession, adding that the plunge in bonds meant that credit spreads had yet to top out and stocks bottom out.

Investor confidence is at its worst level since the global financial crash of 2008, according to the note.

Aggressive rate hikes by major central banks to contain inflation, even as growth slows, have rattled global markets and pushed bond yields higher this week.

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