Latest news with #Urano
Yahoo
01-05-2025
- Business
- Yahoo
Bond ETFs Weather April Volatility, Bring in $10B of New AUM
Market volatility driven by tariff uncertainty hit bond mutual funds hard in April: Investors pulled roughly $60 billion from these funds—the largest outflows since 2022, according to Bloomberg. Bond ETFs, on the other hand, experienced $10 billion inflows. The exchange-traded fund wrapper tends to be cheaper, more liquid and more transparent than its mutual fund counterpart, offering a heightened appeal to money managers, especially during market turmoil. "The tariff tantrum caused a sizable correction in equities. While equity indices flirted with bear market drawdowns, fixed income returns remained positive on the year,' Thomas Urano, co-CIO and managing partner at Sage Advisory, told 'As such, we saw significant rebalancing flows out of fixed income into equities across multiple balanced portfolio platforms.' The bond market performance served as a proper portfolio diversified, allowing for portfolio rebalancing when asset allocation weights drifted offsides, Urano added. While there's no fixed-income class in the mutual-fund wrapper that hasn't experienced outflows of late, according to Bloomberg, ETFs are faring much better. The JPMorgan Core Plus Bond ETF (JCPB), for instance, experienced $177.5 million of net inflows in April, data show. The flow story is different for the more expensive, actively managed fixed-income ETFs. The JPMorgan Ultra-Short Income ETF (JPST) and Janus Henderson AAA CLO ETF (JAAA) experienced net outflows in April, according to data, of 904.3 million and 1.1 billion, | © Copyright 2025 All rights reserved
USA Today
12-04-2025
- Business
- USA Today
The bond market sell-off is more worrisome than the one in stocks. Here's what to know.
The bond market sell-off is more worrisome than the one in stocks. Here's what to know. Show Caption Hide Caption President Trump pauses tariffs for 90 days President Trump announced a 90-day suspension of newly imposed tariffs on multiple countries, providing relief to global markets and European leaders. Cheddar United States government bonds are a unique type of financial asset: so free of risk and sought-after that they have long constituted the linchpin of many parts of the world's financial system. The creditworthiness of Washington and the strength of the most powerful economy in the world make American bonds and notes so attractive to foreigners that they own nearly one-third of all outstanding Treasurys. So a recent sell-off in that section of the market has investors on edge. Over the last week, the 10-year Treasury note has added roughly 50 basis points, and some of the one-day moves for several bond maturities have been among the highest in decades, according to various reports. 'I tell clients that we can look at the bond market as a harbinger of economic anxiety and that when the bond market speaks, the stock market reacts,' said Vance Barse, founder of the national financial advisory company Your Dedicated Fiduciary. 'The typical investor focuses on the stock market but institutional investors look to bonds for a pulse on the market.' Bond yields (rates) and prices move in opposite directions, so the recent sell-off has yields moving higher. Another way to think about that relationship: When bonds are more attractive, prices rise – and the issuer of the debt has less reason to entice investors by offering to pay them a higher interest rate. In contrast, in an environment like this one, the U.S. government – and by extension taxpayers – will have to pay more. What is 'forced selling' in financial markets? One of the concerns about the recent rout is that stocks and bonds tend to move in opposite directions. Investors are more prone to ditch stocks when the economy is slowing, and turn instead to the reliability of bonds. When different types of assets move in tandem, it tends to signal a deeper fissure in financial markets. The initial response to President Donald Trump's April 2 announcement on tariffs was more traditional, noted Thomas Urano, chief strategist at Austin-based Sage Advisory, a fixed-income manager with $28 billion in assets. 'Everyone was worried about a recession,' Urano said, so investors piled into bonds, sending yields lower. But as stocks continued to sell off, things got messy. Recession talk: Who decides when the US enters one? 'When everybody starts to sell at the same time, prices get very choppy,' Urano said. It's harder for traders to know what the ideal prices are for various assets, and how much risk should be assigned to each. 'It kind of leads to mass chaos,' he said. In some big market blow-ups, big investors may need to sell assets they aren't counting on letting go of, just because they need cash. There's been anecdotal evidence that such 'forced selling' is what's been going on recently, said Jon Adams, chief investment officer of $4.1-billion Calamos Wealth Management. These kinds of market seizures are rare – but not unheard of. Analysts point to the panic in March 2020 when the world's governments contemplated shutting down their economies for the first time in modern history as one example, and the depths of the 2008 financial crisis as another. But one of the biggest differences between now and then is that the current sell-off now is entirely due to the trade war started intentionally by the Trump White House. Many of the traditional tools for managing financial crises, including Federal Reserve intervention, won't help – and should not be counted on. Not only is the Fed unwilling to be seen as taking sides, Urano said, but its tools are not appropriate for the current situation. 'Lowering rates is not going to change what's happening on the policy side.' Why do budget deficits matter to the bond market? Perhaps the biggest concern for many market participants is that the bond rout may not be over, if the United States has lost at least some of its long-term credibility. The bond sell-off 'really could be about default risk,' said Matt Fabian, a partner with Municipal Market Analytics, a bond market research firm. 'This might be saying something about the U.S. government's ability to function. There's every reason to be concerned about the government as a going concern.' More: Tariffs are slamming financial markets. Mortgage rates won't fall as hard. Even if officials don't outright refuse to honor U.S. government obligations, the chance of some sort of technical blunder has increased dramatically because of the 'gutting' of workers and processes in Washington, Fabian pointed out. What's more, the Republican budget that's making its way through Congress will add trillions of dollars to the amount of debt we have outstanding, since deficits are financed with borrowing. It's 'a horrific budget trajectory,' Fabian said. Meanwhile, the wild swings in the bond market make it nearly impossible for companies and households to plan for the long term. At some point the volatility could 'become self-fulfilling' and tip the economy into a downturn, Adams told USA TODAY. 'I think if confidence was dented enough, uncertainty was high enough, individuals and businesses put off decisions long enough, that could cause a recession.' All in all, recent events have many analysts recalling the bond market's reputation as a seer of coming events. 'It's hard to picture this ending well,' Fabian said.
Yahoo
12-04-2025
- Business
- Yahoo
The bond market sell-off is more worrisome than the one in stocks. Here's what to know.
United States government bonds are a unique type of financial asset: so free of risk and sought-after that they have long constituted the linchpin of many parts of the world's financial system. The creditworthiness of Washington and the strength of the most powerful economy in the world make American bonds and notes so attractive to foreigners that they own nearly one-third of all outstanding Treasurys. So a recent sell-off in that section of the market has investors on edge. Over the last week, the 10-year Treasury note has added roughly 50 basis points, and some of the one-day moves for several bond maturities have been among the highest in decades, according to various reports. 'I tell clients that we can look at the bond market as a harbinger of economic anxiety and that when the bond market speaks, the stock market reacts,' said Vance Barse, founder of the national financial advisory company Your Dedicated Fiduciary. 'The typical investor focuses on the stock market but institutional investors look to bonds for a pulse on the market.' Bond yields (rates) and prices move in opposite directions, so the recent sell-off has yields moving higher. Another way to think about that relationship: When bonds are more attractive, prices rise – and the issuer of the debt has less reason to entice investors by offering to pay them a higher interest rate. In contrast, in an environment like this one, the U.S. government – and by extension taxpayers – will have to pay more. One of the concerns about the recent rout is that stocks and bonds tend to move in opposite directions. Investors are more prone to ditch stocks when the economy is slowing, and turn instead to the reliability of bonds. When different types of assets move in tandem, it tends to signal a deeper fissure in financial markets. The initial response to President Donald Trump's April 2 announcement on tariffs was more traditional, noted Thomas Urano, chief strategist at Austin-based Sage Advisory, a fixed-income manager with $28 billion in assets. 'Everyone was worried about a recession,' Urano said, so investors piled into bonds, sending yields lower. But as stocks continued to sell off, things got messy. Recession talk: Who decides when the US enters one? 'When everybody starts to sell at the same time, prices get very choppy,' Urano said. It's harder for traders to know what the ideal prices are for various assets, and how much risk should be assigned to each. 'It kind of leads to mass chaos,' he said. In some big market blow-ups, big investors may need to sell assets they aren't counting on letting go of, just because they need cash. There's been anecdotal evidence that such 'forced selling' is what's been going on recently, said Jon Adams, chief investment officer of $4.1-billion Calamos Wealth Management. These kinds of market seizures are rare – but not unheard of. Analysts point to the panic in March 2020 when the world's governments contemplated shutting down their economies for the first time in modern history as one example, and the depths of the 2008 financial crisis as another. But one of the biggest differences between now and then is that the current sell-off now is entirely due to the trade war started intentionally by the Trump White House. Many of the traditional tools for managing financial crises, including Federal Reserve intervention, won't help – and should not be counted on. Not only is the Fed unwilling to be seen as taking sides, Urano said, but its tools are not appropriate for the current situation. 'Lowering rates is not going to change what's happening on the policy side.' Perhaps the biggest concern for many market participants is that the bond rout may not be over, if the United States has lost at least some of its long-term credibility. The bond sell-off 'really could be about default risk,' said Matt Fabian, a partner with Municipal Market Analytics, a bond market research firm. 'This might be saying something about the U.S. government's ability to function. There's every reason to be concerned about the government as a going concern.' More: Tariffs are slamming financial markets. Mortgage rates won't fall as hard. Even if officials don't outright refuse to honor U.S. government obligations, the chance of some sort of technical blunder has increased dramatically because of the 'gutting' of workers and processes in Washington, Fabian pointed out. What's more, the Republican budget that's making its way through Congress will add trillions of dollars to the amount of debt we have outstanding, since deficits are financed with borrowing. It's 'a horrific budget trajectory,' Fabian said. Meanwhile, the wild swings in the bond market make it nearly impossible for companies and households to plan for the long term. At some point the volatility could 'become self-fulfilling' and tip the economy into a downturn, Adams told USA TODAY. 'I think if confidence was dented enough, uncertainty was high enough, individuals and businesses put off decisions long enough, that could cause a recession.' All in all, recent events have many analysts recalling the bond market's reputation as a seer of coming events. 'It's hard to picture this ending well,' Fabian said. This article originally appeared on USA TODAY: Investors are dumping bonds. Here's why that's a problem. Sign in to access your portfolio
