* Rally past 10 weeks coincided with flow rotation from cash to corporate bonds not stocks
* BofAML Bull & Bear index (from 0.1 in Feb to 5.0)…sentiment at 11-month highs
* “Summer of Shocks” (buy vol) more plausible…H1 policy “panic” ended this week, BofAML say Fed hikes June, bears getting “stopped in”, Japan yen surge (Chart 3)/China bond vigilantes/ISM<50/BREXIT all risk-off shocks
* “Summer of Stocks” (boring macro/trading range/grind higher) plausible…cash still high, US/EU credit underpinned, breadth improving
>>> Asset Class Flows
- Equities: $6.0bn outflows (outflows in 5 of past 6 weeks) ($8.7bn mutual fund outflows vs $2.7bn ETF inflows)
- Bonds: $5.3bn inflows (inflows in 8 of past 9 weeks)
- Precious metals: $0.3bn inflows (inflows in 15 of past 16 weeks)
- Money-markets: $1.4bn inflows (but $118bn outflows past 9 weeks)
>>> Equity Flows
- Europe: big $4.8bn outflows (largest outflows since Oct’14) (12 straight weeks = longest streak since May’10)
- Japan: $2.5bn outflows (7 straight weeks) (longest streak since Feb’12)
- EM: small $0.1bn inflows
- US: $1.6bn inflows (first in 3 weeks)
By sector, largest inflows to financials in 8 weeks ($0.4bn); weakest inflows to REITs in 10 weeks ($14mn); consumer records largest outflows in 14 weeks ($1.1bn)
>>> Fixed Income Flows
- Largest munis inflows since Jan’13 ($1.3bn) (32 straight weeks of inflows)
- $1.2bn outflows from Govt/Tsy funds (10 straight weeks)
- $0.3bn inflows to EM debt funds (10 straight weeks)
- $3.9bn inflows to IG bond funds (8 straight weeks)
- $0.2bn inflows to TIPS (11 straight weeks)
- $0.5bn inflows to HY bond funds (inflows in 9 of past 10 weeks)