Technology funds have partially reversed their record inflows from the previous week, while European flows saw their largest outflows in 14 weeks ahead of the French elections, Bank of America strategists said in a report.
Equity funds saw $8.7 billion in inflows, bond funds received $7.3 billion, money market funds gained $3 billion, and gold attracted $900 million, while $500 million exited from crypto in the week leading up to June 26.
Analysts suggest that a payroll confirmation of a weak US labor market could cause 30-year bond yields to fall below 4%, with investors likely reacting by maintaining a weak US dollar and continuing the “long Nasdaq, short Russell” trade.
However, there could be “further downward pressure in coming weeks on “middle class” cyclicals,” analysts cautioned.
During the week, tech saw its largest outflow in 16 weeks at $3.6 billion, reversing the record inflow of the previous week, with the tech sector ETF XLK flipping from an $8.2 billion inflow to an $8.6 billion outflow.
At the same time, the energy sector saw its largest outflow since March 2023 at $1.5 billion.
Regional flows showed US outflows resuming at $800 million, Europe experiencing its sixth consecutive week of outflows and the largest in 14 weeks at $2.1 billion, emerging market (EM) stocks enjoying a fourth week of inflows at $5.6 billion, and Japan seeing outflows resuming at $700 million.
By investment style, US large-cap funds received $6.2 billion in inflows, while US small-cap funds had $3.1 billion in outflows and US growth funds saw $9.8 billion in outflows.
In fixed income, investment-grade (IG) funds had their 35th consecutive week of inflows at $3 billion, high-yield (HY) funds experienced a second week of outflows at $900 million, Treasuries marked their eighth week of inflows at $4.3 billion, and EM debt saw inflows resuming at $800 million.