Bond Managers , Tin Hat on Please !

Ok the latest ICI data on US mutual fund has just been released and guess what ? moms and pops  are still selling bonds like it is going out of fashion and buying equities like there is no tomorrow. Hence the red squares on my chart that shows the T-Stats of the inflow/outflow for each asset buckets over diverse time mutual funds 14082013 …and yes those  10 year bond yields are still going higher and further incentivising the laggards to come out of their bond holding….

To the risk of repeating myself  we all know that there is  a massive overhang in bond holdings, so my contention is that we may have entered a spiral and that somewhere on the line we are going to see a repeat of 94…..a good old fashioned bond market crash….

cumulative inflow 14082013

Meanwhile as we gathered from the Fed minutes everyone is getting very cagey about mentioning  when they will start tapering  (or is it tampering…) ….looks like the street is about to dictate the Fed monetary policy by jettisoning  those low yielding assets for something more sexy…..