Investors Aren't Worried About The Great Rotation At All Right Now — Here's How We Know

dumpster diving junk trash

That didn’t take long.

After ditching junk bonds at a record pace in June on the news that the Federal Reserve might slow its asset purchasing program soon, investors are buying them back up at a record pace.

Junk bonds netted a record $5.4 billion of deposits last week while investors pulled $1.8 billion from investment grade, according to Bloomberg.

It’s an indication that investors are preferring the yield of junk bonds over the stability of corporate or municipal bonds.

From Bloomberg:

Relative yields on high-yield bonds globally were 511 basis points on July 26 compared with the all-time low of 233 in June 2007, Bank of America Merrill Lynch index data show. Spreads on investment-grade notes of 150 basis points are up from this year’s low of 132 on May 28.

The so-called Great Rotation — a concept that came to vogue earlier this year when investors poured money into equity funds stoking fears that bonds would see a mass exodus — has yet to materialise.

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