High-Yield Bond Managers Just Grew Their Assets By More Than Any Month In History

From JPMorgan’s Thomas Lee, some interesting observations about how funds are being shifted around.

It turns out that high-yield bond managers took in more money (as a percentage of their total AUM) over the last 4 weeks than in any period before in history.

Photo: JPMorgan

Of course, as you can see, this came after a few weeks of heavy outflows, but then, most huge months have been like this.

According to Lee — who does tend to shade bullish in most environments — these kinds of inflows have historically augured very well for stocks.

Photo: JPMorgan

So why is money flowing in?

According to Lee, there’s a huge disconnect between the implied probability of corporate defaults (as measured by the spread of high-yielding debt to risk free) and the actual pace of defaults.

Photo: JPMorgan




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