Lipper-FMI fund flow data - Week ended June 05

As the markets have been pricing in large probabilities of Fed rate cut following J. Powell’s speech (from 20% to 66% rate cut now priced in the Fed’s 31 July meeting), outflows in leveraged loan funds have amplified: last week saw the largest outflow in lev. Loan funds ($1.473bn) since the end of last year, leading to a YtD gloomy figure of almost $16bn outflows. HY funds also posted significant outflows for the 2 nd consecutive week, despite the rebound in US equities since the beginning of June and HY spreads declining slightly since the peak of 3 June at OAS+470bp. YtD inflows in HY funds are still positive and close to the levels seen in 2012 (see chart below), which proved to be a good year for HY fund inflows. Meanwhile, US IG funds received net inflows, offsetting somewhat the huge outflows of $5.1bn suffered the week before.