Bonds Are Set to Reap $5 Billion in Pension-Rebalance Shift
- Move from equities into debt likely by month-end: Wells Fargo
- Most of flows expected into long-term bonds, flattening curve
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The flattening of the U.S. yield curve is set to get a bit more fuel as U.S. pension funds will need to rebalance this month by moving $5 billion into fixed income and out of equities.
Wells Fargo & Co. strategists reckon that shift will take place because the pensions’ funding ratios have improved given rising equities as well as higher yields -- which reduce the discounted value of the systems’ liabilities. By the bank’s calculation it will be the biggest such wave since a $23 billion flow in March.