Investors Return To Long-Dated U.S. Bonds
Investors returned to long-term U.S. bond funds during May, according to data from Morningstar (MORN).
U.S. long-dated bond funds attracted $7.4 billion U.S. of fresh investors capital in May, their largest monthly inflow in more than two years.
The May inflows were a reversal from April, which saw big outflows amid a sharp drawdown prompted by U.S. President Donald Trump’s tariff regime.
Morningstar said the May reversal shows that investors are once again seeking the safety of higher-yielding debt as they weigh uncertainties such as tariffs, inflation, and geopolitics.
Inflows into long-term bond funds show that investors expect weaker growth and more market turmoil ahead and are turning back to bonds as a safe haven asset.
U.S. long-term bonds sold off heavily in April on concerns that U.S. tariffs might spark inflation, while expectations that President Trump's tax bill could further inflate the U.S. deficit.
However, many Wall Street analysts say concerns surrounding tariffs and the deficit are starting to ease, which is helping to renew interest in U.S. Treasuries and long-dated bonds.
Morningstar data shows short-term bond funds saw $5.8 billion U.S. of outflows in May, while long-term bond funds of 10-year to 30-year maturities attracted $4.2 billion U.S. of capital.
BlackRock’s (BLK) iShares 20+ Year Treasury Bond ETF led with inflows in May, attracting $4.3 billion U.S., while iShares 10-20 Year Treasury Bond ETF received $1.2 billion U.S.
The stock of Morningstar has declined 7% this year to trade at $309.88 U.S. per share.
