Global Navigator: Positioning for the US rate cut bounce

With only a few key data points standing between now and the Federal Reserve’s September meeting, expectations of a first cut in US interest rates since 1Q20 continue to harden.

During the week ending August 21, investors positioned themselves for lower interest rates, steering over $40 billion into major US-mandated fund groups for the second week running. US Money Market Funds have taken in $100 billion since the beginning of the month as investors take advantage of current yields. Physical Gold Funds, meanwhile, took in more than $1 billion for only the third time year-to-date and Technology Sector Funds recorded their eighth consecutive inflow and 26th of the year so far.

In the Developed Markets Equity Funds arena, the universe of?US Equity Funds?has seen the greatest divergence in individual fund performance over the first seven months of 2024, followed by UK and Italy-mandated funds.

Other trends captured by EPFR-tracked fund flows reveal:

• Passively managed Equity Funds absorbed $22 billion.
• Biggest inflow for Global Emerging Markets (GEM) Equity Funds since mid-May.
• 33rd consecutive outflow for Thailand Equity Funds.
• Flows into Colombia Equity Funds hit their highest level in over 11 months.
• Seven EPFR-tracked Sector Fund groups recorded inflows.
• Second-largest monthly inflow for Technology Sector Funds since February 2021.
• Bond Funds reported a $15 billion inflow.
• $37 billion flowed into Money Market Funds.

For further insights, please read the full report.