Economic Charts

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Thursday, November 18, 2010

Weekly Fund Flows

The weekly Fund Flows were released Wednesday.  The fund flows report shows the level of inflows or outflows from mutual funds (foreign & domestic) and Bonds (Taxable and Municipal).   Last week $677 million flowed out of domestic stocks and $2.3 billion flowed into foreign stocks, taken together showed an inflow to stocks in general (even though the money is being sent overseas to foreign stocks).   Again, money continues to flow into bonds by the billions.   Taxable bonds had an inflow of $4.022 billion dollars and for the first time since July money flowed out of Municipals by $115 million.
It would seem that even though the stock market has been going up, retail investors are wary of the domestic stock market still and more confident in foreign stocks.  
Many think that the rush to Bonds is forming a big bubble with a lot of risk being brought onto the table. If the U.S. gets pressured into raising interest rates the bond bubble may burst.  
To that end I think this next chart sums it up the best.  Since July 28th of this year we have piled $100.946 billion dollars into bonds, Foreign funds have seen a run up to $11.554 billion in investment dollars and Domestic stocks has seen an exodus of $46.715 billion dollars.

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