U.S. Treasury ETFs See Largest Weekly Outflows in Nearly Two Decades
nashnova research
US Treasury ETFs recorded their largest single-week outflow in about twenty years as retail investors fled en masse; yet multiple model indicators suggest the path of least resistance for yields over the next one to two months still points lower.
How rare is this outflow?
Measured as outflow relative to total net assets, this week's exit has been matched or exceeded only a handful of times in roughly twenty years.
Bloomberg macro strategist Simon White notes that fiscal-deficit fears, bond-repo disputes, and inflation expectations have spread from institutions to retail, with the latter voting with their feet.
This means → it is not just institutional rebalancing — retail sentiment has made a rare collective turn.
After similar outflows historically, where did yields go?
White's historical review shows that after outflows of comparable scale, yield moves were split roughly 50/50 — half the time up, half the time down — offering limited directional guidance.
The sole clear exception was the 2020 basis-trade (a strategy exploiting futures-vs-cash price gaps) unwind, when yield direction was unambiguous.
In plain terms = the fact that "retail ran" alone does not tell you whether yields rise or fall next.
What signals currently lean toward lower yields?
Signal one: White's fair-value model — built on global central-bank rates, the yield curve, oil prices, and policy rates — shows the 10-year Treasury yield is about 13 basis points above fair value.
Signal two: seasonal patterns show yields tend to drift lower on average in Q3 and Q4.
This means → two independent dimensions both point to "current rate pricing is rich," lending support to a move lower.
What could push yields higher instead?
The Bloomberg US Treasury Index's year-on-year change shows bonds remain in overbought territory; if prices mean-revert, yields still have room to rise.
White also flags that structural concerns over government deficit size could override the historical playbook.
In plain terms = bond prices have already rallied significantly — if the "what goes up must come down" force wins out, yields could climb instead.
Putting it together, what is White's call?
He judges that the path of least resistance for yields over the next one to two months still points lower, even though retail sentiment has turned markedly bearish.
This reflects a striking mismatch: retail is panic-selling, yet models and seasonals say yields are more likely to fall.
Put simply = retail's feet are casting a bearish vote, but the data is not on their side — for now.
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