Soaring bond yields, persistent inflation fears, and ballooning government debt in major economies triggered a massive wave of risk-aversion, sending investors flocking into cash-equivalent safe havens for the week ended October 7.
📌 Key Capital Flows & Market Indicators:
- +$153.81 Billion into Money Market Funds: The largest weekly net purchase since May 6, as capital sought shelter from global fixed-income volatility.
- Yield Shock in Government Bonds: US 10-year Treasury yields surged to a 24.5-year high of 5.3645% on rising oil prices, while French 10-year bond yields hit a 24-year peak of 4.994% over deficit concerns exceeding 5% of GDP.
- +$560 Million into Equity Funds: Weakest weekly stock inflow in 3 weeks. European (+$6.19B) and Asian (+$6.16B) equities saw gains, while US equity funds suffered $5.11B in outflows.
- Sector Divergence: Tech (+$5.37B), Utilities (+$1.10B), and Industrials (+$1.03B) led sector gains, whereas Financials saw a sharp $3.47B exit.
- Bond & Commodity Pivots: Global bond funds absorbed +$26.03B (led by $9.36B in short-term bonds), while Gold and precious metals funds secured a 4th straight week of gains at +$1.41 Billion.
💡 Takeaway: Fiscal deficit pressures and persistent inflation expectations are pushing global investors to prioritize liquidity, short-duration bonds, and physical assets over volatile equities.