A NOTE FROM BOB
This week, several Exchange Traded Notes (ETNs) were closed, some after sharp declines that drove them below their minimum required indicative values. Some leveraged and inverse ETFs also closed.
Some large corporate bond funds (LQD) traded at discounts to their net asset values recently. Why? Investors seemed unwilling to pay the prices for some of these bonds, fearful of slower business or downgrades. The gap always narrows, however. Does it mean downgrades are coming for corporate bonds? Not clear, but some days corporate bonds (LQD) were down more than junk bonds (JNK).
Not surprisingly, very large outflows from bond ETF funds this week, partly on concerns the government is going to flood the world with Treasuries to pay for the coronavirus rescue package. Lipper showed largely outflows from municipal bonds and high yield as well. Why municipal bonds? Those bonds finance much of the stuff that is going to be impacted by coronavirus: convention centers, subway and transit systems, etc. For more analysis and actionable insights, catch me live on Mondays at 1 on ETF Edge. KEY STORIES
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Kamis, 19 Maret 2020
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