Olde Hornet
Well-Known Member
There’s a wave of selling estimated to be in the billions that’s about to hit the stock market
https://www.cnbc.com/2020/06/23/the...ions-thats-about-to-hit-the-stock-market.html
The final day of June is a week away, and Wall Street is already speculating that there’s the potential some asset allocators, like pension funds, could take the big gains from the stock market and move them into bonds.
There’s a wide range of views about how much selling could hit the stock market, but some strategists say the resulting market move may not be that big after all because of prior selling and action in the derivatives market.
The amount of pension fund rebalancing is estimated in a wide range, with some estimates from $35 billion to $76 billion.
Wells Fargo estimates the rebalance into bonds could be the largest in six years.
With the S&P 500 up more than 21% for the quarter so far, strategists are handicapping the likelihood that pensions and other funds and investors will sell some of their big stock market gains and buy bonds in the course of the next week.
Estimates of how much could move out of the stock market are wide ranging and JPMorgan analysts say if stocks lose ground as a result, it would be a buying opportunity. There’s also the chance that not much at all could happen, since some strategists say the volatility of month end and quarter end may have already been playing out in the equity derivatives markets, and investors could also have already been shifting stock holdings.
“The end of the quarter is going to be pretty interesting, given how much the market has moved during this quarter. There could be volatility here. We already witnessed it and there’s potential for more, as we move toward the end of Q2,” said Dan Deming, managing director at KKM Financial.
https://www.cnbc.com/2020/06/23/the...ions-thats-about-to-hit-the-stock-market.html
The final day of June is a week away, and Wall Street is already speculating that there’s the potential some asset allocators, like pension funds, could take the big gains from the stock market and move them into bonds.
There’s a wide range of views about how much selling could hit the stock market, but some strategists say the resulting market move may not be that big after all because of prior selling and action in the derivatives market.
The amount of pension fund rebalancing is estimated in a wide range, with some estimates from $35 billion to $76 billion.
Wells Fargo estimates the rebalance into bonds could be the largest in six years.
With the S&P 500 up more than 21% for the quarter so far, strategists are handicapping the likelihood that pensions and other funds and investors will sell some of their big stock market gains and buy bonds in the course of the next week.
Estimates of how much could move out of the stock market are wide ranging and JPMorgan analysts say if stocks lose ground as a result, it would be a buying opportunity. There’s also the chance that not much at all could happen, since some strategists say the volatility of month end and quarter end may have already been playing out in the equity derivatives markets, and investors could also have already been shifting stock holdings.
“The end of the quarter is going to be pretty interesting, given how much the market has moved during this quarter. There could be volatility here. We already witnessed it and there’s potential for more, as we move toward the end of Q2,” said Dan Deming, managing director at KKM Financial.