Remember the legend of the great rotation? Neither do we. But we do know that a Treasury fund inflow of $3.06 billion, the largest since at least 2010 according to Bank of America, coupled with an equity fund outflow of $7.1 billion, means just one thing: the great unrotation is raging. It does beg one question, however, with equity funds dumping in the past week, just who is actually left BTFATH? (Don’t worry, that’s rhetorical – we all have Kevin Henry and the HFT crew to thank for the ongoing endless manipulation of the rigged market).
From Bank of America:
Reverse rotation into Treasuries
Following the recent market volatility mutual fund and ETF investors sold stocks, reduced purchases of high grade and instead bought Treasury bonds last week (ending on May 21st). Long-term Treasury funds reported an inflow of $3.06bn, the highest since at least 2010.  As flows tend to follow returns, the buying is consistent with the sharp decrease in interest rates last week.  Some of this large buying of Treasuries appears to have come at the expense of longer-dated high grade funds: inflows to high grade outside of short-term funds dropped by about $1bn relative to the prior week to a $0.85bn inflow. Inflows to short-term high grade funds also fell to $0.42bn last week from $0.82bn inflow in the prior week.
Still, the net effect was more flows into bonds, as inflows to all fixed income funds rose to $6.61bn last week from a $3.54bn inflow in the prior week. Equity funds, on the other hand, reported a $7.10bn outflow last week, down from a $9.02bn inflow in the prior week. At the same time inflows to high yield funds rose to $0.73bn last week, driven by ETFs. Loan funds, on the other hand, continued to report outflows, totaling $0.36bn last week, while inflows to EM (+$0.51bn) and munis (+$0.54bn) remained steady. Finally, flows for money market funds remained close to flat, with a $0.57bn outflow.
In tables:
