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S & P 500, Russell 2000, Corporate Bond Fund Flow at Start of Q2 2021

S & P 500, Russell 2000, Corporate Bond Fund Flow Issues:

  • S & P500Linked SPYETF flow When the index exceeds 4,000 levels, it will continue to be mixed.
  • The 20-day moving average of the IWMETF flow linked to Russell 2000 will be negative for the first time since mid-February.
  • Corporate bond ETFLQD showed a record outflow in early April.

S & P 500, Russell 2000, Corporate Bond Fund Flow at Start of Q2 2021

The US economic outlook continues to improve as the second quarter begins. Data prints show rising demand, rising consumer spending and confidence, and strong activity from both the service and manufacturing sectors. The $ 1.9T American Rescue Plan has been legislated and is beginning to boost the economy even further. The rise in long-term yields in the United States seems to have paused for the foreseeable future. Meanwhile, one in four adults in the United States has been vaccinated against Covid, and the country will resume some normal economic activity this summer.

These factors pushed up key risk assets, raising the S & P 500 to the 4,000 level for the first time in history in early April.

Despite the recent strength of the S & P 500, the flow to SPYETF continues to mix. Just before reaching the 4,000 level, ETFs recorded the highest spills in years. The 20-day moving average of SPY’s fund flow continues to fluctuate around zero levels, reflecting the mixed sentiment of ETFs.

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The S & P 500 continues to hit record highs, while the small cap-based Russell 2000 Index is trading flat. The index has been struggling since it hit a record high in mid-March, dropping from more than 2,300 and currently trading in the 2,200 range. Further movements in the index may depend on the timing and path of economic resumption and further movements in bond yields.

IWM, Russell 2000, IWM ETF, IWMETF Fund Flow

The IWMETF funding flow linked to Russell 2000 also reflects the struggle Russell is currently facing. In April, the outflow was mainly seen from ETFs. The 20-day MA has returned to the negative territory for the first time since late February, when Treasury market jitter drove risk-off sentiment across the market.

Russell may see strong support from further developments in Biden’s infrastructure bill, but it remains to be seen if it has sufficient support to pass it. Without a catalyst to push the index to record highs, IWMETF may continue to withdraw in the near future.

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Despite the current suspension of long-term Treasury yield movements, bond market sentiment remains tough as investors are thinking about possible rising inflation. Recent and future CPI and PPI prints help alleviate these concerns among information-deficient people, as the underlying effect from last year’s data shows inflation rates well above 2% year-on-year. not. The March YoY PPI was printed at 4.2%, and the March CPI data could tell a similar story.

LQD, Corporate Bonds, LQD ETFs, LQD Fund Flows, MOVE Index

Corporate bond ETFLQD recorded the largest outflow ever on April 1. ETFs saw a large influx in March and April last year as the Federal Reserve promised to support the corporate bond market. The termination of these facilities at the end of 2020 coincided with a significant increase in spills, and these rising spills continued until 2021 as prices rose. Outflows from YTDs and ETFs total more than $ 12 billion.

The MOVE Index, which tracks US interest rate volatility, has stopped its march higher, but remains significantly higher than levels in late 2020 and early 2021.

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S & P 500, Russell 2000, Corporate Bond Fund Flow at Start of Q2 2021

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