Bonds Lead, But Equities Hold Ground

Fixed income is absorbing the most cash right now. Bond ETFs pulled in a net $22.2B last week, with a flow imbalance of 74.8 — clear buying pressure. Equities added $7.2B over the same period. Over three months, the picture flips in scale: equities dominate with $660B in net inflows vs $231B for fixed income. Investors are doing both — buying bonds for safety while keeping equity exposure intact.

Geography Flows

The biggest story this week is the U.S. itself. Domestic ETFs posted a net outflow of $5B last week, with $58.1B leaving against $53.1B arriving. That is the largest single negative flow in the geography bucket. Over three months, U.S. funds still attracted $264B net — so the weekly reversal is a sharp break from trend.

The beneficiaries are clear. Emerging Markets ETFs posted a flow imbalance of 91.8 last week, one of the highest readings anywhere. Net inflows hit $1.3B. Brazil drew $390M, with a 91.7 imbalance. Japan added $1.9B on a 68.6 imbalance, consistent with its strong $96.5B three-month trend. Developed Markets Ex-U.S. funds also attracted steady buying. The message: rotation out of U.S. exposure and into international markets is picking up pace this week.

Sector Rotation

Technology held the top weekly inflow spot at $711M net. But the flow imbalance was only 52.7 — barely positive. Over three months, Tech leads all sectors with $39B in net inflows. So the long-run bid is intact, but conviction is fading at the margin.

Consumer Discretionary is the week's biggest sector loser. It shed $482M with a flow imbalance of just 25.2 — strong selling pressure. Industrials followed with a $398M outflow and a 34.1 imbalance. Both looked far healthier over three months, suggesting recent weakness is a near-term rotation, not a structural exit.

Financials collected $463M last week. Real Estate added $118M. Health Care, despite $6B in three-month inflows, saw $245M leave last week — another example of short-term pressure on previously strong sectors.

Asset Class & Strategy

Commodities attracted $1B last week on a 60.3 imbalance. Alternatives added $601M. Both show modest but consistent buying interest across timeframes.

On strategy, Vanilla ETFs — the plain index-tracking variety — posted a $1.9B outflow last week. That is a notable reversal from $302B in three-month inflows. Meanwhile, active ETFs, dividends, growth, and ESG all posted positive weekly flows. Dividend strategies showed the strongest buying pressure at 84.6 imbalance. ESG pulled in $1.4B last week, consistent with its $19.5B three-month trend.

The overall tone is cautious rotation. Bonds are being bought aggressively. Within equities, money is moving away from U.S. and domestic cyclicals toward international markets, income-focused strategies, and active management.