in the week after donald trump <u+2019>s u.s. election victory, investors pulled more cash out of<u+00a0>u.s.<u+00a0>fixed-income funds than at any time over the last three years,<u+00a0>in one early sign that the recent bond selloff may have legs. big selloffs in bond markets often go hand in hand with investors taking money out of mutual funds. this can create a vicious cycle, whereby selling begets more selling. investors withdrew<u+00a0>$8.2 billion<u+00a0>from<u+00a0>u.s.<u+00a0>bond funds in the week ending nov. 16, according to data<u+00a0>provider<u+00a0>epfr global. that is the largest weekly outflow since june 2013 at the height of the so-called taper tantrum , when the federal reserve raised the prospect of slowing its bond purchases and sent treasurys tumbling. mr. trump<u+2019>s victory last tuesday has increased expectations of fiscal stimulus and inflation, both of which are bad for bonds. government bonds were on the move again friday, after a volatile period. the yield on the 10-year treasury note was<u+00a0>2.327%, up from 2.278% thursday and 1.867% on the day of the election. yields have spiked across the developed world as investors sell bonds from<u+00a0>australia<u+00a0>to britain. <u+201c>we may not be at the start of a 35-year bear market for bonds, but it feels as though we<u+2019>re at some kind of inflection point,<u+201d> said john stopford, head of multiasset income at investec asset management. <u+201c>we would expect a move similar to the taper tantrum of 2013,<u+201d> he added. investors pulled a net $36 billion out of u.s. bond funds between late may and early september 2013 during the so-called<u+00a0>taper tantrum, according to epfr global. over that period, 10-year treasury yields climbed by around a percentage point in the space of a few months. yields rise as prices fall. sudden moves in the bond markets have encouraged investors to quickly pull money before. in the spring of 2015, money exited european bond funds as the german government bond market led a selloff in global fixed income. investors pulled a net $15 billion from european bond funds in the 12 weeks following the start of that selloff. still, investors may not read too much into only one week of flow data. there are also good reasons why the bond selloff could peter out. many economists believe the global glut in savings should keep yields depressed. in europe and japan, where there are negative interest rates, pension funds and insurance companies remain hungry for yield. it is also not clear how much of mr. trump<u+2019>s policy agenda will get enacted. any backtracking on fiscal stimulus, for instance, could send yields back down again.<u+00a0>increased spending typically increases the supply of bonds. but as long as money is draining from bond funds, investors will continue to be cautious. <u+201c>people just step back,<u+201d> said jub hurren, a credit fund manager at aviva investors, referring to periods of stress like the taper tantrum. <u+201c>no one wants to stand in the way of the move higher<u+201d> in yields, said mr. hurren. write to christopher whittall at christopher.whittall@wsj.com
u.s. bond funds see largest outflow in three years after trump victory  - wsj
christopher whittall