Jan 16, 2020 - Economy & Business

Investors poured record cash into bonds last week

Data: Investment Company Institute; Chart: Naema Ahmed/Axios
Data: Investment Company Institute; Chart: Naema Ahmed/Axios

More money flowed into bond funds last week than at any time in at least seven years, data from the Investment Company Institute released Wednesday showed.

Why it matters: The S&P 500 gained 30% last year and the stock market has delivered strong returns so far in 2020, but investors continue to buy safe-haven bonds and sell stocks.

What's happening: ICI representatives say the move likely represents a rebalancing effort by investors after a strong year in equities, but it follows a year in which data showed investors did exactly the same thing.

  • In 2019, ICI reported the largest outflows from equity funds in the history of its data (dating back to 2010), while bond funds saw historic inflows, including an all-time high in municipal bond buying.
  • Lipper, which has data going back to 1992 and tracks more than $40 trillion of assets, also reported record outflows from stocks last year.
  • Money market funds, which are essentially savings accounts, saw holdings swell to levels last seen in 2009, following the global financial crisis.

What it means: Many have worried the market may be getting overconfident and complacent in the face of good news like the signing of the U.S.-China phase one trade deal and an expected resolution for Brexit.

  • However, the numbers show there remains a strong sense of caution running through the market.

Go deeper: The market will need the Fed again in 2020

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