Fund boards, management go on high alert around bond liquidity

[CityFarmer]

For those vested in US fixed income...

Fund boards, management go on high alert around bond liquidity

NEW YORK - U.S. fund firms are taking extra measures to make sure they don't get stuck holding hard-to-sell bonds in the event that fixed income markets see a massive race to the exits when interest rates start to rise.

Over the past few months a growing number of asset managers, including Neuberger Berman, Natixis Global Management and T. Rowe Price have been testing their funds against various market scenarios, building cushions of cash, shorter-duration bonds and other liquid securities, and regularly discussing risks with their boards.

The concern is this: As the Federal Reserve begins to raise rates, which many expect will begin to happen next year, investors will rush to sell bonds as their value drops in a rising interest rate environment. Historically Wall Street banks have been the buyers of these bonds, but regulations and capital requirements imposed since the financial crisis have forced these firms to slash their inventories.
...
http://www.todayonline.com/business/fund...-liquidity

[greengiraffe]

Not just in US fixed income... there are global repercussions...

Our retailers yet to get levelled access to local bonds so buyers beware...

For those vested in US fixed income...

Fund boards, management go on high alert around bond liquidity

NEW YORK - U.S. fund firms are taking extra measures to make sure they don't get stuck holding hard-to-sell bonds in the event that fixed income markets see a massive race to the exits when interest rates start to rise.

Over the past few months a growing number of asset managers, including Neuberger Berman, Natixis Global Management and T. Rowe Price have been testing their funds against various market scenarios, building cushions of cash, shorter-duration bonds and other liquid securities, and regularly discussing risks with their boards.

The concern is this: As the Federal Reserve begins to raise rates, which many expect will begin to happen next year, investors will rush to sell bonds as their value drops in a rising interest rate environment. Historically Wall Street banks have been the buyers of these bonds, but regulations and capital requirements imposed since the financial crisis have forced these firms to slash their inventories.
...
http://www.todayonline.com/business/fund...-liquidity

[BlueKelah]

Dun think USA ready for rate rise yet. More likely another QE or debt default if Republicans get more power.

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[Stephen]

Dun think USA ready for rate rise yet. More likely another QE or debt default if Republicans get more power.

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Wah another QE!

I think the market will be numbed and not be affected already....upside limited, downside drastic.. Unlikely la

[Temperament]

Not just in US fixed income... there are global repercussions...

Our retailers yet to get levelled access to local bonds so buyers beware...

For those vested in US fixed income...

Fund boards, management go on high alert around bond liquidity

NEW YORK - U.S. fund firms are taking extra measures to make sure they don't get stuck holding hard-to-sell bonds in the event that fixed income markets see a massive race to the exits when interest rates start to rise.

Over the past few months a growing number of asset managers, including Neuberger Berman, Natixis Global Management and T. Rowe Price have been testing their funds against various market scenarios, building cushions of cash, shorter-duration bonds and other liquid securities, and regularly discussing risks with their boards.

The concern is this: As the Federal Reserve begins to raise rates, which many expect will begin to happen next year, investors will rush to sell bonds as their value drops in a rising interest rate environment. Historically Wall Street banks have been the buyers of these bonds, but regulations and capital requirements imposed since the financial crisis have forced these firms to slash their inventories.
...
http://www.todayonline.com/business/fund...-liquidity

Some or many of us think Stock Markets crash because of "Capital Market". But usually it is because of the "Debt Market"
So if the "Debt Market" crashes, run for your life if you are still in the Stock Market. But usually it's a bit too late for anyone to escape.
My 2 cents.