The bond market is bracing for the worst and loading up on cash

Bond Market Crash - Public Domain

In a report Monday, Bloomberg’s Lisa Abramowicz highlights that bond funds are now holding 8% of their assets in cash, the highest rate since 1999.

Abramowicz spoke to Jerry Cudzil, who heads TCW Group’s US credit trading and said “We’re as defensive as we’ve been since pre-crisis.

TCW’s credit funds, Abramowicz notes, are holding the most cash since the 2008 financial crisis.

Coupled with the concern about rising rates is that investors will struggle to find buyers when everyone rushes for the exit on bonds. This — a lack of liquidity — was also mentioned in the Federal Reserve’s monetary policy statement in May.

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