As expected last Wednesday, the Federal Reserve kept interest rates unchanged at the conclusion of its policy meeting confirming the “U.S. economic growth has been rising at a strong rate” and the job market was strengthening. Their statement also stressed that household spending has “grown strongly”. This upbeat assessment had no impact on the yield of the 10-year U.S. Treasury note (virtually unchanged over the week) as investors worried about a further escalation in the U.S.-China trade war and bought bonds accordingly (see net inflows into bond funds). Indeed, President Trump raised pressure on China by considering 25 percent tariffs on $200bn worth of Chinese imports.
Despite trade tensions and capital outflows (mainly from U.S. domiciled investors), the U.S. stock market edged higher in the wake of Apple’s stellar results that helped ease concerns about the future growth of the tech sector after Facebook and Twitter’s descent into hell at the end of July. This sector logically dominated equity fund flows in early August, offsetting the redemptions recorded two weeks ago. By contrast with their U.S. peers, European equity funds lost ground with very low trading volumes.
Find the full report here : https://www.trackinsight.com/weekly-flow-report/2018-08-03/global