Investors kept their options open during the fourth week of July, steering over $30 billion into EPFR-tracked Money Market Funds while analyzing the statements that followed the major central-bank meetings bracketing the latest reporting period. What investors were looking–and hoping–for was evidence that policy makers at the U.S. Federal Reserve, Bank of Japan and European Central Bank will err on the side of accommodation in the face of stubbornly low inflation rates, rather than pressing ahead with the "normalization" of their respective monetary policies.
Expectations that the latest inflation numbers will prompt the hawks to keep their talons sheathed during the second quarter of the year helped key U.S. equity indices hit fresh record highs ahead of the Fed’s July 25–26 meeting. Meanwhile, flows to Japan and Equity Funds climbed to six- and 11-week highs, respectively, and Emerging Markets Equity and Bond Funds extended their lengthy inflow streaks. Overall, EPFR-tracked Equity Funds posted collective net inflows of $9.8 billion during the week ending July 26, and Bond Funds $6.6 billion.
Money Market Fund inflows for the week hit a year-to-date high of $31 billion. Europe Money Market Funds, which saw a surge in redemptions ahead of EU reforms that took effect July 20 and must be fully implemented by 2019, snapped their longest run of outflows since late 2009.
At the asset-class and single-country levels, Taiwan Equity Funds posted their biggest outflow in exactly a year, while flows into Norway and Greece Bond Funds hit 82- and 94-week highs, respectively. High-Yield Bond Funds recorded outflows for the fifth time in the past six weeks, Total Return Bond Funds extended a run of inflows that stretches back to the fourth week of January, and flows to Municipal Bond Funds accelerated for the third consecutive week.
Cameron Brandt is Director of Research for EPFR Global, an Informa Financial Intelligence company.
