Bond Market Plummets Following June Withdrawals

According to Investment News, bond outflows broke numerous records for the month of June. Following speculation that the Federal Reserve will begin slowing down bond purchases, investors dumped a record $60 billion in bond funds. In just one week, investors yanked a whopping $26 billion, surpassing the previous record by more than $10 billion.

The Federal Reserve’s purchase of bonds over the past years has helped keep long-term interest rates down. A rise in interest rates could cause existing bond yields to decline. However, raising interest rates are inevitable.

According to Investment News, “interest rates jumped more than 100 basis points to 2.66% during June, after starting May at 1.6%”, following the record breaking bond withdrawals, despite the Federal Reserves continual purchase of bonds and mortgage-backed securities.

The world largest bond mutual fund, Pimco Total Return Fund, suffered $9.9 billion in losses, according to Investment News. While Pimco bond manager, Bill Gross, attempts to convinces investors the worst is over, many financial advisors are moving clients assets away from bond holdings.

The foregoing information, which is publicly available here, is being provided by The White Law Group, LLC.

If your financial advisor misrepresented a bond fund as “safe” or failed to adequately disclose interest rate risk associated with long duration bond funds, like Pimco Total Return Fund, The White Law Group may be able to help recover your bond losses.

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