The latest batch of US mutual funds inflow/outflow data has been released by the Investment Company Institute in the US today and guess what ? It is business as usual for US investors….Buy international equities and sell bonds…guess no one has been paying scant attention to the equity market wobbles we have seen aside the wannabe Roubini and other scaremongers of this world. anyhow the usual charts are below….
No doubt the international equities buying trend remain strong and this despite the recent comments by Yellen and weaker than expected ( but not weak) US economic data as well as the recent jitters in the equity and emerging markets. Clearly this may have provided a short term respite for bond holders but my thoughts are that all this will be short lived and that we will soon see the 10-year US trading above 3%. Also the continual purchase of international securities by US investor is likely to bring headwind for the US$. This is possibly highlighted by the high resilience of the EUR-USD bearing in mind the differences in yield and economic growth of both the US and Europe…..Bearing in mind the rumoured long US$ position of the market it may be tempting to become contrarian. Even at 1.3600 the Euro could still provide some good profit opportunities…..