Investors are jumping out of the market only amplifying some of the worst losses in U.S. debt in at least 37 years at the same time as new regulations prompt Wall Street firms to cut back on trading corporate bonds, Bloomberg reports.
“When bond investors start to meaningfully divest themselves of their positions, it will be analogous to yelling fire in a crowded theater,” Michael Underhill, the chief investment officer at Capital Innovations LLC, which manages $1.5 billion, said in an e-mail Aug. 23.
Investors say it’s becoming harder to quickly exit positions as banks cut inventories and curb riskier businesses such as trading (NTMBIV) with their own money to comply with rules from the Basel Committee on Banking Supervision and the U.S. Dodd-Frank Act.
