A quiet week in the markets but they have largely held onto the gains made over the last few weeks. Trading will likely be thin over the Christmas period but 2024 is looking more optimistic as the end of the interest rate cycle looms.
Here is this week’s agenda:
- Equity funds see net inflows
- Companies rush to take advantage of lower borrowing costs
- Janet Yellen says the signs are good for the US
- It’s different in the Far East
- Chinese exports hedge higher
- Prepare for a revival
Equity funds see net inflows
Markets have soared on bets that interest rate cuts are possible, with some analysts predicting steep cuts to the headline rate. Whether this is getting ahead of the game too soon, remains to be seen.
We have seen net inflows into equity markets by UK investors following a significant period of net selling. Bond (fixed income) volumes also benefited as yields fell. Inflows to the fixed-income sector reflect investors trying to lock into yields at 15-year highs and hoping for capital gains. Interestingly though, according to Calastone’s Fund Flow Index (FFI), as reported in Investment Week, money markets (cash) attracted more than double the amount of capital for bonds. In the year to date, they have gathered more cash deposits than in the previous eight years combined. The reasons are obviously high interest rates, greater protection than in banks and the flexibility to move money back into the markets quickly.
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