Investors are accelerating the sell-off of U.S. long-term bond funds, leading to the largest outflow of funds from such funds since the peak of the COVID-19 pandemic five years ago.
According to media calculations based on EPFR data on the 26th, in the second quarter of this year, U.S. long-term bond funds covering government and corporate bonds experienced a net outflow of nearly $11 billion.
This figure not only breaks the trend of an average inflow of about $20 billion over the past 12 quarters, but also indicates that the scale of fund withdrawals this quarter is expected to match or even exceed the levels seen during the severe market turmoil in early 2020.
This large-scale redemption comes amid growing concerns about the U.S. fiscal outlook. Although fund flows are only a small part of the vast U.S. bond market, they are seen as a key barometer of investor sentiment. Bill Campbell of DoubleLine believes that the flow of funds is “a symptom of a larger problem” and stated that “both domestic and foreign investors are generally concerned about holding the long end of the U.S. Treasury yield curve.”
<h2>Concerns Over U.S. Fiscal Condition, Declining Appeal of Long-Term Bonds</h2>
The massive scale of U.S. debt is one of the core factors triggering investor unease. Trump's &#34;Big Beautiful&#34; plan is under consideration in Congress, but independent analysts expect that the plan will add trillions of dollars to U.S. debt over the next decade, meaning the U.S. Treasury will have to sell a large amount of bonds to cover the funding gap.
Despite the White House arguing that tariffs and faster economic growth will help reduce debt, the market is clearly taking a cautious stance.
Meanwhile, market participants are also preparing for higher inflation triggered by potential tariffs imposed by the Trump administration on major trading partners. Inflation is one of the main &#34;enemies&#34; of bond investors, as it erodes the real value of long-term fixed interest payments. Long-term bonds are particularly sensitive to inflation, as sustained price increases diminish the purchasing power of future fixed income.
Goldman Sachs' chief credit strategist Lotfi Karoui stated that the outflow of funds “reflects concerns about the long-term fiscal sustainability outlook.”
Robert Tipp, global bonds head at asset management firm PGIM, added:
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“This is a volatile environment, inflation remains above target, and the supply of government bonds is enormous and seemingly endless. The Federal Reserve's 2% inflation target has led to tension and general unease regarding the long end of the yield curve.”
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<h2>Sensitivity to Inflation and Preference for Short-Term Bonds</h2>
Investor risk aversion has been directly reflected in the price performance of U.S. long-term Treasuries. This quarter, the price of long-term U.S. Treasuries has fallen by about 1%, although it had previously seen larger losses following Trump's announcement of tariffs in April, it has since rebounded somewhat, but overall performance remains weak. On Thursday, the yield on the 30-year U.S. Treasury bond fell by 2.6 basis points to 4.816%.
<img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/228a1c38-701e-4b15-ba19-b920f352d286.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/228a1c38-701e-4b15-ba19-b920f352d286.png"/>
In stark contrast to the plight of long-term bonds, funds holding short-term U.S. Treasury bonds have seen a continuous influx of capital. EPFR data shows that over $39 billion has flowed into short-term strategy funds this quarter. This is mainly due to the Federal Reserve maintaining short-term interest rates at a high level this year, allowing these short-term funds to provide substantial returns, making them a &#34;safe haven&#34; for investors in the current uncertain market environment.
Despite the large-scale capital outflow from the market, some experts remain cautiously optimistic about the long-term role of the U.S. Treasury market. Andrzej Skiba, head of BlueBay US fixed income at RBC Global Asset Management, stated that investors may choose to diversify their allocations into international bonds at this time, but he does not believe this signifies &#34;the end of the U.S. Treasury market, nor the end of U.S. Treasuries' role as a core holding in global fixed income portfolios.&#34;
However, Skiba also pointed out that market participants may begin to demand &#34;more compensation further out on the curve&#34; when purchasing new U.S. Treasuries. He warned:
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&#34;Even if we do not see the arrival of an earthquake, we may still feel the tremors.&#34;
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Risk Warning and Disclaimer
The market carries risks, and investment should be approached with caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article align with their specific circumstances. Investment based on this is at one's own risk

Investors accelerated the sell-off of U.S. long-term bond funds, with a net outflow of nearly $11 billion in the second quarter, marking the largest withdrawal since the pandemic. This phenomenon reflects market concerns about the U.S. fiscal outlook, particularly as Trump's proposals could lead to a significant increase in debt. Although the White House argues that economic growth will help reduce debt, the market remains cautious. Analysts from Goldman Sachs and PGIM point out that the outflow of funds indicates worries about long-term fiscal sustainability, with rising inflation and bond supply diminishing the attractiveness of long-term bonds

- Investors are rapidly selling U.S. long-term bond funds, leading to the largest outflow since the COVID-19 peak, with nearly $11 billion in net outflows in Q2 2025.  
- This trend reflects growing concerns over the U.S. fiscal outlook, exacerbated by high inflation and significant government debt, prompting a shift towards short-term bonds.  
- Despite the outflows, some experts remain cautiously optimistic about the long-term role of U.S. Treasuries in global fixed-income portfolios, though they anticipate demands for higher compensation on longer maturities.

Escape from U.S. long-term bonds! A single quarter outflow of $11 billion, the largest capital withdrawal wave since the pandemic