it’s a cash race

Anticipating a lack of liquidity in the market, global equity funds sold off during the week of May 6-11 as investors feared a slowdown in economic growth and further tightening of monetary policy by major central banks to curb inflation, which has taken hold. We remind you that the market becomes less liquid when it becomes more difficult to make transactions. The way out for the investor may be to look for another segment where liquidity is higher. Today’s data suggests that the situation in many segments is tense.

In a semi-annual report released on Monday, May 9, the Federal Reserve System (Fed) warned of deteriorating liquidity conditions in major financial markets amid growing risks associated with the war in Ukraine, tightening monetary policy and high inflation, Bloomberg reports.

“By some measures, market liquidity has declined since the end of 2021 in the markets for recently issued US Treasury cash securities and stock index futures,” the US Central Bank Financial Stability Report said.

Increased risk of sudden deterioration

“Although the recent deterioration in liquidity has not been as sharp as in some past episodes, the risk of sudden and significant deterioration seems higher than usual”the report says.

And add:

“Furthermore, after the Russian invasion of Ukraine, liquidity in the oil futures markets was somewhat limited at times, while the markets for some other affected commodities were subject to restrictions. noticeable faults. »

The race for liquidity

Watching this liquidity tension, during this fifth week of net selling, investors liquidated global equity funds. (Global Equity Funds) for the amount $10.53 billion only against $1.65 billion in net sales last week according to the American financial company Refinitiv Lipper (owned by Reuters since 1998).

[Flux de fonds : actions (en rouge), obligations (vert) et marché monétaire mondiaux. Cliquer pour agrandir le graphique.]

L’MSCI Index global stocks that measure the performance of stock markets in economically developed countries, dived same week at 607.4, the lowest level in a year and a half, inflationary pressures, causing fears of a hard landing in the economy.

Raising rates to curb inflation ‘won’t be painless’, warns Fed chief Jerome Powell

US Equity Funds (U.S. equity funds) recorded from their side net sales for the amount $8.46 billion, while European equity funds brought in $4.33 billion. However, investors were net buyers of $2.23 billion in Asian funds.

From an industry point of view, funds financial recorded a sixth consecutive week of releases, grossing $1.71 billion. Investors also withdrew about $0.7 billion each sectors booty and industrial.

global share sectors,

[Flux de fonds : Fonds d’actions mondiales par secteur.]

Global bond funds are also looking for liquidity

Over this time bond funds Global published results $13.23 billionalso the sixth consecutive week of net sales.

global funds of short-term and medium-term bonds registered exits from $8.14 billion be the biggest weekly release since at least June 2020, but government bond funds held its third weekly fundraiser with a net worth of $3.38 billion.

global bond fund flows

[Flux de fonds obligataires mondiaux au cours de la semaine glissante du 6 au 11 mai.]

Commodities: Gold sales are at their peak

Investors also withdrew $1.73 billion from money market funds, marking the second weekly net sell-off in a row.

Data related to commodity fund showed that weekly net sales in investment fundsgold and from precious metals hit a two-month high of $1.54 billion. gold prices fell below their 200-day moving average.

Investors in emerging markets funds are also looking for cash

Analysis 24.155 emerging market funds showed that investors sold $2.49 billion. equity funds and $2.65 billion from bond fundsmarking the fifth consecutive week of churn in these two segments.

Emerging Markets (EM)

[Flux de fonds – Actions et obligations des marchés émergents]

(with Reuters and Bloomberg. Graphs and data source: Refinitiv Lipper)