If you were wondering whether recent fireworks across markets triggered outflows from equities, the answer’s “no.” Or maybe “not yet” is more apt.

Equity-focused ETFs and mutual funds took in nearly $10 billion over the latest weekly reporting period, according to EPFR. That was actually more than the prior week.

$6.4 billion went to US-dedicated funds and $4 billion to Japanese shares, the third most of 2024 — dip bought, I suppose.

Overall, equities have seen 16 consecutive weekly inflows, and US shares 15 net inflows over those same 16 weeks.

Recall that August is the worst month of the year for equities flows, and the huge $48 billion influx in mid-July plainly suggested a lot of Q3’s flows were front-loaded. Given that, and in the presence of a shock, one might’ve expected outflows.

And there were some. Outflows, I mean. Junk funds for example saw the largest exodus since October, when Treasury yields peaked for the cycle. And bank loans the largest redemptions since March of 2020.

The inflow to cash amid the chaos was quite pronounced: $81 billion globally and $53 billion in the US, where money fund AUM scaled a new peak near $6.2 trillion.

The good news is that, according to BofA’s Michael Hartnett, a bevy of key technical soft-to-hard (landing) thresholds weren’t breached this week. He mentioned 4% on the long bond, 400bps on CDX high yield and 5050 SPX. It’s “important,” he said, for the SOX and XLK (the big-tech ETF) to hold their respective 200-days. Should those “levels break, traders will then target the 2021 highs,” he wrote.

“A simple rule-of-thumb for managing stock exposures at the end of the business cycle is to see whether we’ve breached the 200-day moving average after a yield curve inversion,” JPMorgan’s cross-asset strategy team remarked, adding that although it’s a somewhat “crude” shortcut, the 200-day “happens to be a lookback that aligns reasonably well with the business cycle.” Because the “correction” on Wall Street, such as it was, didn’t see the S&P breach the magic line, “we can comfortably (after the fact) attribute it to the various momentum and carry trades reversing,” the bank’s Thomas Salopek said.

Of course, it’s possible this isn’t over. Any of it. The growth scare, the carry unwind and on and on. The table below, from BofA’s Hartnett, shows that equity outflows catalyzed by shocks can manifest on a delay. We’re just one week in.

If we have, in fact, just witnessed a “systemic market blowup” (and the jury’s out on whether this week counts in that regard), the “pattern of flows” thereafter “is consistent,” Hartnett wrote. Stocks see “redemptions for six to 12 weeks.”

But not this week. “Ultimately, this market correction is less bad than initially thought,” JPMorgan’s team said, in the same note mentioned above. “It was assumed that the bad news from the growth risk exemplified by the weak [US] jobs number would be reinforced by the de-leveraging of crowded momentum and carry trades,” they went on, adding that while the de-risking “did take its toll,” and while vols will “retain the memory” of this episode, the pullback left positioning cleaner, allowing vols to subside.

Oh, and Hartnett still says it’ll be wise to sell the first Fed cut.