Since the beginning of this year, under the background that the Federal Reserve and other major central banks have raised interest rates at the same time, all kinds of assets in the world have been "muddy and muddy", and the "debt cow" that has lasted for many years has also come to an abrupt end and turned into a bear market once in 70 years.

However, this trend seems to be reversed again: in the third quarter, the global bond market attracted a lot of retail funds. Some bond fund managers believe that institutional investors' interest in the bond market is also rekindling. With the bond yield reaching a multi-year high and the Fed showing signs of slowing interest rate hikes, the time seems ripe for investors to return to the bond market.

"A few years later, when we look back, 2022 will be a year of total losses and divestment in the bond market, and 2023 will definitely be a year full of opportunities and reinvestment in the bond market." MikeGitlin, head of the collection of CapitalGroup, asserted this.

Retail investors poured into the bond market.

Although the continuous sharp interest rate hike by the Federal Reserve has hit the bond market, with the increase of the benchmark interest rate, bonds are becoming an alternative investment for retail investors with risk preference. The number of transactions on InteractiveBrokersGroupInc's retail bond platform reached an average of 3,000 transactions per day in the third quarter, a three-fold increase over the same period last year. Retail investors flocked to the bond market, hoping to get the highest bond yield in more than a decade. Although retail investors are relatively small participants in the huge American bond market dominated by large institutional investors, pension funds and insurance companies will also refer to the trend of retail funds as retail investors become the new investment vane.

SteveSanders, executive vice president of marketing and product development at InteractiveBrokers, said: "Investors' interest in investing in bonds has been growing in recent years. When the interest rate was low before, the interest rate could not make up for the loss of bonds, so investors showed little interest in bonds. But now, the interest rate level has rebounded, and more investors think it is necessary to take bonds as part of the portfolio. "

In addition to direct bond trading, the two largest junk bond ETFs also attracted record funds. Last week, Isharesiboxhighyield ETF (HYG) attracted a new cash inflow of165438+500 million US dollars, which is the largest inflow since March and the sixth largest inflow on record. SPDR Bloomberg News (JNK) attracted more than $654.38+billion in capital inflows, the highest weekly inflow in history. The weekly capital flow attracted by the superposition of the two has also reached the highest level in history.

The Fed's aggressive interest rate hike policy has kept the yield of 10-year US bonds hovering around 4% after reaching the highest level since 2007, and corporate bonds can provide a considerable premium to the benchmark government bond interest rate. For example, the average yield of the highest rated corporate bonds tracked by foreign media is 5.6%, which is only slightly lower than the highest level since 13.

RichardCarter, vice president of fixed income of FidelityInvestments, said that with the continuous interest rate increase by the Federal Reserve, the yields of various bonds are becoming more and more attractive to investors, especially those retail investors who have previously competed for inflation-protected savings bonds "IBonds". The "I series bonds" issued by the US Treasury provided a yield of 9.62% earlier. TreasuryDirect website of the U.S. Treasury Department is the only channel for investors to buy I-series bonds directly, because too many investors rushed to buy them, which once caused the website to be paralyzed. Therefore, from 165438+ 10/month 1, the interest rate paid by series I bonds is reduced to about 6.47%.

Debt-based manager: The time to return to the bond market is approaching.

At the same time of the crazy influx of retail investors, with the US consumer price index (CPI) showing signs of slowing inflation last week, the attractiveness of bond yields has increased, and many fund managers also believe that the time for both institutional investors and retail investors to return to the bond market is approaching.

"We have seen renewed interest in our bond yield strategy." DanIvasyn, chief investment officer of Pimco, the world's largest debt-based investment management company, said, "We have seen the outflow of funds from some bond categories eased, and some bond categories even recorded a net inflow of funds, and the bond funds we actively managed began to rise." In his view, the reason behind it is simple. Earlier this year, due to the rise in interest rates, bonds fell, and bonds rarely fell with stocks for many years. Bond investors suffered heavy losses, and they also doubted the hedging effect of bonds on the stock market. However, for new investors, all kinds of bond investment products can now provide high yields that have not been seen for many years.

MarilynWatson, head of BlackRock's global fixed income strategy team, also said: "Today, the environment for fixed income investors is completely different from what we have seen for some time. Bond investors can now obtain attractive income levels through risk control, especially those with shorter maturities and higher ratings. "

StephanieButcher, chief investment officer of Jing Shun, said that the company's collection team is very optimistic now, "because the yield of investment-grade corporate bonds and junk bonds has reached the highest level for many years. Finally, investors can get extra income by taking higher risks. "

GershonDistenfeld, co-director of fixed income of Alliance-Bernstein, pointed out that there is a precedent for the rapid recovery of the bond market: after the financial crisis in 2008, the price of corporate bonds rebounded faster than that of stocks. He said: "Fund managers expect the liquidity in the market to return to the fixed income field soon, so many debt-based managers are already competing for positions. Everyone is waiting for the Fed to stop raising interest rates. Once the interest rate hike is suspended, investors will flood into fixed-income assets. "