All’s well that ends well

14 January 2014 By Swaha Pattanaik Follow @swahapattanaik

Contrarians have had a good start to the year. The consensus is that safe bond yields will rise in 2014; they’re falling. Equities are supposed to do well, but look wobbly. Still, a first-quarter setback could improve the chances things will pan out as widely expected by year-end.

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Bank of America Merrill Lynch says bond funds saw net inflows of $5.3 billion while equity funds posted a collective outflow of $427 million in the week to Jan. 8. It said it was the biggest weekly flow into bond funds since May 2013.

The MSCI global equity index has fallen 1.5 percent since the beginning of the year. U.S. 10-year government bond yields have fallen to 2.829 percent from 3.041 percent over the same period while comparable German yields have dropped to 1.809 percent from 1.969 percent.

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