Flows into Equity Funds jumped to a 21-week high during the first week of February, with over $35 billion committed to US Equity Funds, as investors responded to the cheaper valuations on offer after January’s sell-off. But the fear that the Federal Reserve could hike rates at each of their remaining 2022 policy meetings, which triggered the recent declines in US equity markets, continued to chill appetite for bonds. The Bond Funds tracked by EPFR posted their fifth consecutive outflow, a run that has seen over $35 billion redeemed since the second week of January.
Investors parse the meaning of transitory going into December
Hopes that the impact of Covid’s Omicron variant will prove transitory, concern that it will not, and fears that inflation is here to stay whip-sawed global markets during the final days of November. Concerns about the latter issue were crystalized by recently reappointed US Federal Reserve Chair Jerome Powell’s admission that price pressures could spur the Fed to accelerate the tapering of its asset purchases.
Chasing earnings and keeping powder dry
With four out of five US companies reporting Q3 2021 earnings that beat expectations, US equity markets climbed to fresh record highs during in late October.
Earnings growth wrestles inflation for control of market narrative
Rising prices and higher-than-expected earnings shaped investor sentiment during the third week of October. Most of the companies reporting their 3Q21 numbers surpassed expectations. nvestors responded by pouring nearly $25 billion into EPFR-tracked Equity Funds.