>>> Asset Class Flows
* Equities: $4.6bn inflows (note divergence between $6.3bn ETF inflows and $1.7bn mutual fund outflows)
* Bonds: modest $0.4bn outflows (only the second week of outflows in 2015 YTD)
* Precious Metals: small $0.1bn inflows (first inflows in 3 weeks)
>>> Equity Flows
* EM: $4.1bn inflows (largest since Jul’14); note China equity funds see big $4.5bn inflows, largest since Apr’08 (A-shares ETF’s such as China SSE 50 & Huatai-Pinebridge CSI 300 record outsized inflows)
* Japan: first outflows in 14 weeks (albeit tiny $22mn)
* Europe: $1.6bn inflows (2 straight weeks)
* US: $3.9bn outflows (outflows in 9 out of past 10 weeks)
--> By sector: largest inflows to financials funds ($1.2bn) since Dec’14
>>> Fixed Income Flows
* 75 straight weeks of inflows to IG bond funds ($0.9bn)…but weakest inflows since Jan’14 = waning interest
* First outflows from EM debt funds in 10 weeks ($0.2bn)
* First outflows from TIPS funds in 11 weeks ($0.2bn)
* $0.4bn inflows to HY bond funds
* 5 straight weeks of outflows from govt/tsy funds ($1.4bn)
--> Talking Points
* Stocks>Bonds: this week equity inflows ($4.6bn) and bond outflows
($0.4bn)...flows belatedly responding to growing outperformance of global stocks
(+6% YTD) versus global fixed income (-3% YTD).
* Dollar Driver: renewed dollar strength (DXY +8% YTD) sees inflows to Europe
equity funds, outflows from US equity funds (and more surprisingly a weekly pause
in inflows to Japan).
* China in a Bull Shop: massive $4.5bn inflows to China funds, largest weekly inflow
since Apr’08 (Chart 1); big inflows via A-shares ETF’s (China SSE 50 & Huatai-
Pinebridge CSI 300) in run-up to 6.5% SHCOMP overnight correction. Ex. China
effectively no inflows to EM, i.e. no evidence investors see China equity “bubble” as
precursor to strong China growth.
* Here Come the Banks: coinciding with firming Fed hike expectations, biggest
weekly inflow since Dec’14 ($1.2bn) to financial sector equity funds (Chart 2).
* Credit Cracking: smallest weekly inflows to IG bond funds since Jan’14 ($0.9bn –
Chart 3)...waning interest coincides with US IG return index (C0A0 Index) dipping
below 200dma for first ti