Nevertheless, it should be noted that according to Citi data, US equity investment funds saw outflows of $19 billion in July. They have accumulated sales of more than $67 billion for the year as a whole. Naturally, European equity funds have shown a similar performance profile. There were more than $8 billion in purchases of fixed-income funds in the US last month, and more than $59 billion in the first seven months. One would hardly think that a hike in official interest rates is feared.
In fact, this behavior in fixed-income funds is consistent with the downward pressure on debt interest rates. There have also been drops in risk premiums, both in terms of credit and sovereign risk.
The global savings glut favors fixed income in an environment of increasing total indebtedness. And the purchases of paper (fixed income… only fixed income, make no mistake) by central banks do the rest.
