Surge in Bond-Centric ETFs in 2024 and Global Impact of China's Stimulus Policy
In 2024, the United States has seen a significant increase in bond-centric Exchange Traded Funds (ETFs), with around 120 being launched. This represents a sharp rise from the 79 launched by the end of September 2023, as investors have shown heightened interest in bond ETFs following the Federal Reserve's (Fed) rate cut announcement. The Fed plans a total of 150 basis points in additional rate cuts by the end of next year, and the yield on the 10-year Treasury note has fallen to approximately 3.75%. The average monthly inflow in 2024 has also reached a record high of $25 billion, indicating rapid growth in the bond ETF market.
The bond ETF market is shifting from traditional large passive funds to actively managed funds, with major asset managers like Capital Group and Rockefeller launching new funds. The growth of the Treasury ETF segment may fluctuate based on inflation and economic indicators.
Meanwhile, China has announced a large-scale stimulus package, leading to a surge in international oil and metal futures prices. The Indian stock market has also reached record highs, positively influencing the global commodity market. Factors such as China's economic stimulus and geopolitical risks are causing fluctuations in major commodity prices, while the XLF financial sector ETF has shown poor performance.
The Indian market is showing strength due to foreign capital inflows and positive economic policies, though concerns about overvaluation and internal issues have also been pointed out. While China's stimulus measures are positive in the short term, there are concerns about long-term economic recovery.
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