By Cory A Potential Significant Change in Money Flows
This post below come from Marc Chandler, Founder and Editor of Marc To Market. Marc will be on the show tomorrow but in the meantime his latest posting is very important.
I have been mentioning over the past few months the massive amounts of money that have been flowing into European ETFs. It was accepted that this was simply a value play as large money managers thought that European stocks were undervalued compared to the rest of the system. Now we might be seeing a change in terms of money flowing out of these ETFs. If this happens I argue that the money will land back in the US and could result in a major boost for US stocks. Let see if that plays out…
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According to EPFR, investors were net sellers of European equity funds in the week ending July 5 for the first time since March. This appears to have ended the longest buying streak in a couple of years.
Rising yields and valuations were thought to have injected a note of caution as well as some re-weighting at the start of Q2. European equity funds, according to EPFR have taken in $22 bln this year after experiencing outflows of nearly $100 bln last year.
European bond funds, however, continued to draw savings. The $2 mln inflows into European bonds funds pales in comparison to the $2.2 bln inflows recorded the previous week but does extend the buying spree into a 10th week. US bond funds also continued to attract flows. The $.24 bln inflow was the 16th consecutive week that AUM grew.
Japan reported its May portfolio flows alongside its balance of payments report earlier today. Japanese investors bought JPY1.32 trillion of US Treasuries, the most in nine months. They also bought JPY906.4 bln of German and French bonds as well. It was the first time in three months that Japanese investors bought Bunds (JPY315 bln). They bought JPY591 bln of French bonds, the most since 2015. For the 13th consecutive month, Japanese investors bought Australian bonds (JPY94.4 bln).
After buying an average of nearly JPY925 bln a week in foreign bonds in May, Japanese investors, tempered their enthusiasm in June, according to weekly MOF data, and were net buyers of a weekly average of about JPY168 bln. They were net sellers in two of the five reporting weeks in June.
Japanese investors were more consistent buyers of foreign equities. They bought an average of JPY314 bln a week in May and JPY277 bln a week in June. Through June 30, Japanese investors bought foreign equities for six consecutive weeks, which is the longest buying spree since late September last year.
For their part, foreign investors turned net sellers of Japanese bonds in June for the first time since March. The MOF data shows foreigners sold a weekly average of JPY239 bln of Japanese bonds in June after being net buyers of …read more
Source:: The Korelin Economics Report
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