Inflows to equity-focused ETFs and mutual funds persisted for another week, suggesting left-behind investor cohorts may be capitulating into stocks.

Just when it looks like the rally may be fading, bulls find another excuse. This week it was a cooler-than-expected US CPI report and a likewise favorable read on producer prices, which are teetering on the edge of deflation (that’d be a good thing in the US as opposed to China, where the deepening PPI plunge is indicative of an anemic economic recovery).

US equity funds took in nearly $10 billion over the latest weekly reporting period, according to EPFR. That makes $24 billion in two weeks. Last week’s haul was the second-largest of the year.

The net outflow from US-focused funds in 2023 is now just $14.5 billion. Recall that flows inflected in and around Nvidia’s dramatic beat and raise in late May.

Thanks in part to recent inflows to US equities, the net outflow for developed market stock funds YTD is just $778 million. It was deeply negative at one juncture.

There’s still a vast disparity with emerging market equity funds, which have taken in more than $68 billion in 2023, but the point is that as the net outflow from DM funds shrinks, the net inflow to EM funds effectively becomes “total equities.”

The figure above illustrates the point. It shows the evolution of flows since Nvidia’s guide.

“Inflows are accelerating the past seven weeks,” BofA’s Michael Hartnett remarked. It’s “not yet capitulation back-in, but keep an eye on this,” he added, noting that tech funds just enjoyed the largest inflow in a month, indicative of investors “chas[ing] the rally.”