It's never been easier for individuals to enter some of the most esoteric debt markets. Wall Street's biggest firms are worried that it'll be just as simple for them to leave.
Investors have piled more than $900 billion into taxable bond funds since the 2008 financial crisis, buying stock-like shares of mutual- and exchange-traded funds to gain access to infrequently traded markets. This flood of cash has helped cause prices to surge and yields to plunge.
Now, as the Federal Reserve discusses ending its easy-money policies, concern is mounting that the withdrawal of stimulus will lead to an exodus that'll cause credit markets to freeze up. While new regulations have forced banks to reduce their balance-sheet risk, analysts at JPMorgan Chase & Co. are focusing on the problems that individual investors could cause by yanking money from funds.
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