>>> Asset Class Flows
- Equities: $1.8bn inflows (inflows in 3 of past 4 weeks) (note $5.0bn ETF inflows vs $3.2bn mutual fund outflows)
- Bonds: $4.3bn inflows (inflows in 20 of past 22 weeks)
- Precious metals: $0.6bn outflows (largest in 2016)
- Money-markets: $16.7bn outflows
- EM: 9 straight weeks of inflows (albeit modest $0.5bn inflows)…no sell-signal for EM equities this week; needs v large $7-8bn inflows next week to trigger ‘sell”
- Europe: $1.1bn outflows (record 30 straight weeks of outflows; but pace of outflows slowing)
- Japan: $0.7bn outflows (first outflows in 5 weeks)
- US: $2.7bn inflows
- By sector: largest inflows in 10 months to financials funds ($1.2bn); 9 straight weeks of REITs inflows ($0.4bn)
>>> Fixed Income Flows
- 9 straight weeks of inflows to EM debt funds ($0.7bn) (but pace of inflows is weakest in 9 weeks)
- $2.3bn inflows to IG bond funds (inflows in 25 of past 26 weeks)
- $0.3bn inflows to HY bond funds (inflows in 8 of past 9 weeks)
- 50 straight weeks of inflows to Munis ($0.7bn)
- 12 straight weeks of inflows to TIPS ($0.5bn) (largest since May’16)
- 8 straight weeks of outflows from Govt/Tsy funds ($0.2bn)
- First outflows from MBS funds since Jan’16 ($0.2bn)
August payroll: consensus expects 180K; strong payroll (>220K) = banks breakout, US$ rally, value>growth & bonds/quality underperform = rotation to hawkish Fed / stronger macro environment (top-right – Chart 1); weak payroll (<140K) = bonds back in vogue as Jackson Hole seen as false start…note August payroll has undershot consensus for the past five years so very weak print required to derail view of stronger macro trend