Bond Investors Run for the Hills

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July 3 (Bloomberg) -- Investors who poured $1.26 trillion into bond funds in the past six years pulled out record amounts of cash last month, leaving the world’s biggest fixed-income managers struggling to stem the flow. Bloomberg's Mary Childs reports on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Ben bernanke is talk of tapering has pushed the 10-year yield from 160 to 250 in seven weeks, sending bond investors running for the exits.

The pimco total return fund has seen a record -- record withdraw street where investors putting their money?

Mary child's joins us to understand it.

It makes sense that if the largest bond fund in the world is struggling, there would be withdrawals.

Has been a rough going for bill gross spread the fun was down it, it fell 4.7% in may and june and a lot of that was linked to inflation.

There were big in tips.

They put 12% of their total in that budget was the worst month for them on record and it was also the worst month for bond funds all over mutual funds had more than $50 billion worth of withdrawals.

Bond investors were saying we have had a great run but i am scared.

The outflows are certainly remarkable.

When you talk to your sources, what are they saying about what comes next?

A lot of bond investors get nervous in a big rally.

They know that things are not that sunny they tend to see more safety.

Looking at a correction like this, they say they feel better.

Before, they had to buy a bond at $103, why would i do that?

In this environment, you can get $96 or $98 and that is more comfortable.

You actually get capital appreciation on the bond.

Exactly.

There have actually been some inflows.

What a concept!

Tell the viewers what people have been buying?

Friday and monday we started to see people trickling back into bonds.

That is what i hear from investors as they get more comfortable at these levels and coupons start to make sense again and to the yields make better sense.

You saw a little bit of trepidation and we still hear the numbers of the outflows of that causes concern.

But in clause into high-yield in particular?

We have been discussing as far as portuguese yields, above 8% for the first time since november.

How will that change fixed income portfolios out there that have european exposure?

Once you start to see that these are old concerns, people feel comfortable with that kind of risk and you are getting compensated for taking that risk again.

Look at the intraday move on portugal.

It went to 8% and it finished today at 7.47%. to your point, take the bond low enough, you'll find buyers and maybe that is starting to happen.

Before we let you go, what about japan?

It has been a hotly contested trade.

There is a lot of hedge fund manager saying this is the next area to blow up.

It is called the wet all making trade for a reason.

As a lot of investors the opportunity.

Jeffrey gundlach as many opinions on this.

People are nervous about the headline rest.

-- risk.

A lot of big voices on the subject and good to see you.

This text has been automatically generated. It may not be 100% accurate.

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