They were buying stocks over the last week.

Equity sentiment inflected for the better this month amid a tone shift in the bond market, where a run of cool US macro data favored duration bulls and emboldened dovish rates bets.

Because bonds were the proximate cause of equities’ consternation, rates relief translated directly into what BofA’s Michael Hartnett described as an “epic risk rally off the October 27 lows.” “Epic” might be an exaggeration, but 9% on the S&P in the space of three weeks isn’t too shabby.

As Wall Street headed for a third straight weekly gain, EPFR data showed a fifth consecutive inflow for US-focused ETFs and mutual funds.

The latest haul, nearly $26 billion, counted as the second-largest of 2023.

“This is likely in tandem with the playbook in fixed income, amid bets of a softening in the Fed’s policy outlook,” TD Securities’ Chris Whelan, Izidor Flajsman and Joseph Dufton remarked, noting that cyclical equities enjoyed a strong inflow, while defensives shed $1 billion.

As a reminder, 2023’s flows story in US equity funds can be divided into two regimes: Pre-Nvidia Q1 report/debt ceiling deal and post-those two events. By late-May, net flows to US equity funds were negative to the tune of almost $70 billion for the year. With this week’s inflow, US-focused funds have taken in a net $42.5 billion.

The figure above shows cumulative inflows to US stock funds (i.e., the running net total) alongside individual investor sentiment. Suffice to say market participants are feeling demonstrably better about things all of a sudden.

In the week to November 15, AAII’s bull index was the highest since August 9 (i.e., just before the long-end Treasury selloff torpedoed stocks).

If you ask Hartnett, it probably won’t last. “Fade it,” he said.