A new report by Credit Suisse shows billions of dollars have left both the stock and bond market in July and August 2015. Around $6.5 billion flowed out of the stock market in July, while an additional $8.4 billion left the bond market.
While final data for August is not yet in, the first three weeks of the month saw $1.6 billion leave positions in stocks and $8.1 billion from the bond market. In many cases, money that leaves one market arrives in the other. A flight from both markets suggests investors are becoming more risk-averse, preferring to hold their money in cash or other physical assets.
Economist Dana Saporta said in an interview, “It may be that this is an interesting oddity but if we continue to see this it could reflect a more broad-based nervousness on the part of household investors.” Retail investors make up 89% of the assets held in mutual funds, so any loss of confidence affects the entire industry.
Other economic data are uncertain about the speed of recovery. Saporta noted, “It [the outflow of money] might suggest households are getting nervous about holding investments, and that could lead to some real economic implications including cutting back on spending.” According to the Commerce Department, U.S. retail sales went up an anemic 0.6% in July, according to data from mid-August.
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