Earlier this week, as Trump’s tax reform was finally being voted through Congress, we showed that in a surprising market reaction, total asset returns – those combination of S&P and 30Y Treasurys – saw their biggest two-day drop since last December, a shock which led to one of the biggest declines for risk-parity investors in months.
As of this morning we now know the reason for this steep stumble: as BofA Chief Investment Officer Michael Hartnett writes in his latest, and last for 2017, Flow Show report US tax reform passage was greeted by near-record redemptions across key asset classes, with $14.5 billion withdrawn from equities – the largest redemption since Brexit – and a further $3.2bn from bonds, the largest in 52 weeks, and even a modest $0.4bn was pulled from gold funds.
This post was published at Zero Hedge on Dec 22, 2017.