I felt compelled Friday to pen a quick update on the equities flow story in 2023.

The tie-in with the macro narrative is important, and having broached the subject at least twice over the past several weeks, I can’t very well abandon it just because I don’t have anything especially novel to say.

For once, I won’t bury the lede, tempting though it always is. The exodus from US equity funds continued during the latest weekly reporting period. In fact, it accelerated.

More than $10.6 billion fled US stock funds during a stretch that included hawkish rhetoric from Fed officials and a disconcerting update on policymakers’ preferred inflation gauge.

That brought the two-week outflow to almost $20 billion, and the YTD exodus to nearly $37 billion. Large-cap funds lost $8.4 billion over the week.

By contrast, China snapped a multi-week stretch of outflows with a $1.36 billion haul, while EM equity funds as a whole took in $2.38 billion.

Note that “American unexceptionalism” (so to speak) is responsible for the net outflow from DM stock funds in 2023, and thereby also for the stark contrast between what’s come out of DM stocks and gone into EM shares.

That disparity speaks to some of the macro narratives that prevailed at the beginning of the year, as discussed at length here early last month. I do wonder, though, whether the prospect of a “higher forever” Fed will eventually weigh on the case for EM stocks, just as it’s apparently weighing on EM debt appetite (i.e., outflows the last three weeks).

The figure below, from BofA, just shows you YTD “flow winners,” as well as “losers.”

Equity flows are still positive for 2023 as a whole, but so far anyway, the “year of the bond” meme and the allure of cash in an environment where DM monetary policy is no longer beholden to a collection of repressive acronyms, have skewed the flow picture.

Equity funds are currently on track for $107 billion of inflows in 2023, a modest haul in AUM terms, while Treasury funds are pacing for one of their best years ever, again as a percentage of AUM.