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That’s because as stocks lost ground, pension funds’ allocation to equities shrank, and as bonds rallied, those assets in their portfolios increased. In addition to pensions, other funds and investors may also see the need to conduct a
That simply means they could sell bonds and buy stocks.
The Dow is down 21.8% so far this quarter, the worst quarter since the 25% decline in the fourth quarter of 1987 and the worst first quarter ever. The S&P 500 is on pace for an 18% decline, its worst quarter since the fourth quarter of 2008, and its worst first quarter since 1938.
“We think there’s an element of people positioning themselves for a big
“The best, ideal scenario...
rebalance already happen?
Emanuel said the buying may in fact have already been happening. “In theory, they say that kind of thing is supposed to happen at the close
Michael Schumacher, director, rates at Wells Fargo, said his team initially forecast $40 billion in outflows from stocks, but with the rally over the past week, the
“We look at the total gap between where we think pensions are today, and what their target is,” he said. “We calculate that’s at $80 billion, and we assume at quarter end the
Schumacher said the weakness in Treasurys signal some selling Monday, but it was not clear if it was due to