Investors were net sellers of fund assets (including those of conventional funds and ETFs) for the first week in four, redeeming a net $49.8 billion for the LSEG Lipper fund-flows week ended Wednesday, March 20, 2024. However, the headline number is a bit misleading.
Fund investors were net purchasers of equity funds (+$15.5 billion), commodity funds (+$1.6 billion), and alternatives funds (+$138 million) while being net sellers of mixed-assets funds (-$289 million), fixed income funds (-$438 million), and money market funds (-$66.3 billion) for the week.
Market Wrap-Up
While no FOMC interest rate hike was anticipated, all eyes were focused on Federal Reserve Chair Jerome Powell’s policy-setting press conference scheduled for the end of the fund-flows week after inflation data came in hotter than expected earlier in the week, keeping U.S. stocks somewhat range bound.
On the domestic equity side of the equation, the (+1.20%) posted the strongest plus-side return of the often-followed broad-based U.S. indices, followed by the (+1.18%) and the (+1.15%). The (+0.15%) was the relative laggard of the group. Overseas, the (+1.11%) moved to the top of the leaderboard of the often-followed broad-based international indices, followed by the (+0.71%) and the Total Return Index (-0.52%). Meanwhile, the (-1.12%) suffered the largest losses of the subgroup for the flows week.
The Morningstar LSTA U.S. Leveraged Loan Index (+0.19%) outperformed the Bloomberg U.S. Aggregate Bond Index (-0.36%) and the Bloomberg Municipal Bond Index (-0.44%) for the fund-flows week.
For the flows week, the Treasury yield curve flattened a bit, rising at the long end of the curve, with the seeing the largest rise, 10 basis points (bps), to settle at 4.45%. The and yields witnessed the largest declines, falling two bps to 5.50% and 4.59%, respectively. The rose eight bps for the week—settling at 4.27%. The U.S. Treasury yield curve remained inverted, with the 2 and 10-year Treasury yield spread (-32 bps) narrowing by 10 bps during the week.
On Thursday, March 14, U.S. stocks ended lower after investors learned that the February producer price index rose more than expected, advancing 0.6%, and retail sales came in weaker than expected in February, rising 0.6% versus the consensus expectation of 0.8%, showing some signs that consumers continue to be a bit more cautious about their spending habits. Front-month futures rose 1.94% on the day to settle at $81.26/bbl after Ukrainian attacks on Russian oil facilities pressured prices. The 10-year Treasury yield rose 10 bps on the day to close at 4.29%.
The Nasdaq, S&P 500, and Dow ended lower on the day and the week on March 15, with the Dow falling for the third week in a row and the other two booking back-to-back weekly losses as the information-technology sector took it on the chin and investors awaited signals from the upcoming FOMC meeting. Fed funds futures traders expected the Fed to hold its key lending rate steady at the policy meeting next week and again in May, according to the CME FedWatch Tool. The University of Michigan’s consumer confidence survey slipped marginally in March to 76.5 from 76.9 in February, missing analysts’ expectations for a slight uptick. Nonetheless, the 10-year yield rose two bps, closing the week at 4.31%—snapping a three-week streak of declines.
U.S. stocks snapped a three-day losing streak on Monday, March 18, as investors focused on upcoming central bank meetings, with many anticipating that the Bank of Japan (BOJ) will end its negative interest rate policy on Tuesday and the Fed will shed some light on the likelihood of interest rate cuts later this year at the conclusion of its two-day policy-setting meeting on Wednesday. In other news, the National Association of Home Builders reported that builders’ monthly confidence index rose three points in March to 51, rising for the fourth consecutive month as home buyer demand remained strong. The 10-year Treasury yield continued its ascent, rising three bps to 4.34%.
U.S. stock indices closed higher on Tuesday, March 19, with the S&P 500 posting its eighteenth record close of 2024. Early in the day, the BOJ ended its 12-year experiment with negative interest rates, moving its key lending rate to at least zero—giving the Nikkei 225 a boost. Front-month prices rose 0.9% to close the day at $83.47/bbl. The 10-year Treasury yield slipped four bps on the day to 4.30%.
Stocks rose on Wednesday, March 20, with all three indices posting record closing highs after the Federal Reserve Board maintained its interest-rate-cut outlook and as expected left interest rates unchanged. Most officials penciled in three rate cuts in 2024, in line with December’s projections. The 10-year Treasury yield…
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