Bonds Lead as US Equities Bleed Cash

Fixed income is the week's standout story. Bond ETFs pulled in $11.0B net over the past week. Equity ETFs shed $2.8B in the same period. That is a sharp reversal from the three-month picture, where equities dominated with $668B in net inflows versus bonds' $227B.

The shift is clear. Investors are rotating defensively right now, even as the longer trend remains risk-on.

Geography Flows

The US is this week's biggest drag. American ETFs recorded a $14.7B net outflow, with selling pressure tilting the flow imbalance to just 41.8 — firmly in selling territory. Over three months, the US pulled in $265B net. That three-month trend is now stalling hard.

International markets are absorbing the exit. Global ETFs took in $4.3B this week, with a flow imbalance of 72.3. Japan added $3.0B. Developed Markets Ex-US drew $1.1B. Emerging Markets added $1.3B. All three posted strong imbalance scores above 80, signalling persistent buying pressure.

China is a notable split. Over three months, China ETFs attracted $34.2B — one of the strongest regional stories globally. This week, China turned to a $1.2B outflow with an imbalance score of 45.2. South Korea and Taiwan also flipped to net outflows this week after strong three-month runs.

Sector Rotation

Financials led all sectors with a $761M net inflow this week. Flow imbalance hit 66.3 — consistent buying. Consumer Staples added $237M with an 81.4 imbalance, the highest of any sector. Real Estate gained $239M.

The losers are telling. Industrials posted the sharpest weekly outflow at $762M, with an imbalance of just 26.3 — heavy selling. Energy shed $338M. Utilities lost $177M. These are classic defensive sectors turning into exit targets.

Over three months, the picture was reversed. Tech led all sectors with $38.7B in net inflows. Industrials were positive at $2.5B and Utilities gained $1.2B. This week's Industrial and Utilities selling represents a clean break from the recent trend.

IT sector weekly flows were nearly flat at $142M, suggesting big-tech enthusiasm has cooled but not collapsed.

Asset Class and Strategy

Commodities drew $1.8B this week. Alternatives added $1.6B. Currency ETFs pulled in $1.3B. All three signal investors hedging rather than committing to directional bets.

Active ETFs gathered $3.1B in net flows this week, with a flow imbalance of 65.8. Over three months, active strategies attracted $194.5B — the second-largest strategy category behind vanilla passive. The active-to-passive shift is accelerating.

Dividend strategies added $1.4B this week at an 85.8 imbalance. Value ETFs drew $753M. Both categories outperformed growth, which managed only $260M.

The overall tone is defensive. Bond buying is up, US equity selling is real, and the rotation into international markets and income-focused strategies points to investors reducing risk heading into the back half of September.