Market Movements

What's happening in Today's Markets? According to First Trust Advisors, LP, money is flowing into the following areas:


What does this mean? The market is acting to correct recent mispricings. For example, the continued flow of capital into municipal bonds should bring yields down below those of treasuries, a gross mispricing that has been present for more than a month. The huge flow into high-yield corporates should narrow the spread between those bonds and Treasuries, which is the widest it's been in more than five years, implying huge rates of defaults, which simply aren't there. It also appears that some investors are beginning to bottom fish domestic equities, with domestic equities seeing a strong reversal from massive outflows to fairly strong inflows. This all coincides with the huge draw down in money market assets, as cash seeks risker investments including not only the aforementioned equities and fixed-income products, but clearly commodities as well.