Investors are swiftly shifting their capital into U.S. and global bond funds, betting big on imminent rate cuts from the Federal Reserve.
According to LSEG data, a whopping $17.69 billion flowed into global bond funds in the week ending August 28th, with U.S. bond funds alone attracting $9.58 billion.
This marks a six-week high as market participants wager that Fed Chair Jerome Powell might soon pivot toward easing interest rates.
Stateside, a significant $5.42 billion was funneled into U.S. government bonds, the largest such allocation since October 2022.
The trend underscores a growing consensus that rate cuts are on the horizon—a sentiment that’s driving both individual and institutional investors to seek safer harbors.
Elsewhere, gold and money markets are holding their ground. Money markets raked in $8.18 billion globally, continuing a four-week streak of positive inflows.
Meanwhile, gold and other precious metal funds recorded $342 million in net inflows, marking a third straight week of gains.
However, it’s not all sunshine and rainbows.
The U.S. stock market saw a $2.83 billion decline during the same period, reflecting investor anxiety and a potential shift away from equities.
In a twist of irony, Bitcoin ETFs—a darling of the risk-on trade—experienced $277.2 million in outflows over the last five days, a clear sign that caution is creeping in.
As the CME’s FedWatch tool indicates, the market is split: 30% expect a more aggressive 50 basis points cut, while the majority—70%—anticipate a more modest quarter-point reduction.
The coming weeks will reveal whether these bets pay off, but one thing’s certain: the winds of change are blowing through the financial business markets.
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