Investors have been testing the waters over the past month, yanking $868 million out of U.S. equity ETFs while pouring $5.2 billion into funds that invest in fixed income with duration of less than three years, Colas said, citing XTF data. The iShares Short Treasury Bond fund, which focuses on fixed income with duration between one and 12 months, alone has pulled in $3.4 billion over the past month, according to FactSet.*
This change is usually done because of fear of a recession; however, Obama turned over an economy on fire to Trump. The Republican tax cuts were like pouring gasoline on the fire. There is so much money sloshing around that I don't see how a recession can be possible this year. Certainly, corporate earning the first quarter have been great.
The result of this is what is called a "flattening yield curve" for bonds, i.e. the interest rate paid on short-term bonds approaches the interest rate on long-term bonds. The "yield curve" can even become negative, i.e. short-term bonds pay a higher interest rate than long-term bonds. This is considered very bad and usually means you are entering a recession or are in one.
* https://www.cnbc.com/2018/04/25/market-is-obsessed-with-10-year-yield-should-be-watching-the-2-year.html
https://www.cnbc.com/2018/05/01/investors-continue-buying-bonds-amid-the-most-hated-bull-market.html
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