U.S. Weekly FundFlows Insight Report: Investment Grade Funds Suffer Largest Weekly Outflows In 85 Weeks

During Refinitiv Lipper’s fund-flows week ended December 1, 2021, investors were overall net purchasers of fund assets (including both conventional funds and ETFs) for the seventh straight week, adding $32.5 billion.

Money market funds (+$26.3 billion), equity funds (+$13.0 billion), and tax-exempt bond funds (+$36 million) all attracted new money during the fund-flows week. Taxable bond funds (-$6.8 billion) were the only asset class to suffer outflows. Money market funds have tailed their largest four-week inflow moving average since June 2021.

Index Performance

At the close of Refinitiv Lipper’s fund-flows week, U.S. broad-based indices took it on the chin as both the DJIA (-4.98%) and S&P 500 (-4.01%) logged their worst weekly performance since October 2020. The small-cap-focused Russell 2000 was hit the hardest (-7.89%)—lowest since March 2021. Even the tech-heavy Nasdaq realized its lowest weekly return (-3.73%) in more than six months.

Not much difference for overseas broad market indices—the Nikkei 225 (-2.58%), DAX 30 (-1.36%), and Shanghai Composite (-0.17%) all depreciated on the week.

Rates/Yields

Treasury yields fell along the yield curve. The two-,10-, and 30-year Treasury yields all fell drastically (-12.58%, -12.77%, and -9.78%, respectively). Since the end of Q3 2022, the two- (+94.81%), three- (+59.54%), and five-year (+16.08%) Treasury yields have significantly outpaced the 10- (-6.09%) and 30-year yields (-14.97%), resulting in a flattening of the yield curve.

The U.S. 30-year fixed-rate mortgage average moved to 3.10%, marking roughly a 12% increase since the beginning of August. The United States Dollar Index (DXY, -0.87%) fell over the week, while the VIX (+41.63%) spiked significantly.

Market Recap

U.S. markets were closed on Thursday, November 25, for the Thanksgiving Day holiday.

The shortened trading day on Friday, November 26, surprisingly showed a lot of activity. Black Friday, which typically sees muted trading volume observed equity markets plummet more than 2.0% each—the Russell 2000 (-3.67%) and DJIA (-2.53%) were the largest detractors on the day. Despite the Department of Labor last week reporting jobless claims falling below 199,000—the lowest level since November 1969, a new COVID-19 variant (named omicron) drove market sentiment. Uncertainty also sent Treasury yields down; each falling by its largest daily percentage in more than one year—two-year (-19.25%), 10-year (-9.67%), and 30-year (-7.15%) are the most followed maturies. The VIX ended the shortened session up 54.04%.

Monday, November 29, witnessed a bounce back in the equity markets—Nasdaq (+1.88%), S&P 500 (+1.32%), and DJIA (+0.68%) all gained on the day. The VIX fell 20.48% as sentiment stabilized. President Joe Biden said, “there’s no cause for panic.” He went on to ensure Americans no shutdowns or lockdowns are on the near horizon surrounding the omicron variant. The 10-two Treasury yield spread increased by 5.60%, marking the largest daily jump since June.

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