Fund Flows Into Ultra-Safe Bonds As Companies Enjoy Record Trust

This is an abridged version of our Daily Report.

ETF investors are loving bond funds

Bond funds have dominated the ETF inflow list lately, especially short-term government Treasury funds. The Technology sector is the only one that has seen large, and consistent inflows among sectors.

Broad commodity funds have attracted a lot of attention, which didn’t work out too well last time.

Companies say “just trust us."

Investors are buying a record amount of loans without the usual protections through the first half of the year. Loans issued without standard investor protections are making up nearly 1/3 of all leveraged loans. Discretionary companies are getting the most trust, while Staples are being shunned the most in 7 years.

Options enthusiasm

Options traders bought (or sold) more than two calls for every put on Tuesday, pushing the Equity Put/Call Ratio below 0.5 for one of the few times in recent years. According to the Backtest Engine, over the past five years a reading below 0.5 has led to a gain in the S&P 500 over the next week 46% of the time (17 out of 37 attempts).

Short-term extremes

The Short-Term Optimism Index has averaged 70% for the past week, one of the higher readings in recent years. According to the Backtest Engine, that has led to flat returns over the past five years over the next couple of weeks.