During Refinitiv Lipper’s fund-flows week ended January 6, 2022, investors were overall net purchasers of fund assets (including both conventional funds and ETFs) for the third straight week, adding $13.4 billion.

Equity funds (+$9.2 billion), taxable bond funds (+$5.4 billion), and tax-exempt bond funds (+$841 million) all attracted new money for the week. Money market funds suffered outflows of $2.1 billion.

Index Performance

At the close of Refinitiv Lipper’s first fund-flows week of 2022, U.S. broad-based indices traded down with the NASDAQ (-4.22%), Russell 2000 (-2.46%), S&P 500 (-1.93%), and DJIA (-0.22%) each logging negative weekly returns.

Overseas broad market indices fared much better, the DAX 30 (+2.52%), FTSE 100 (+1.90%), and Nikkei 225 (+0.72%) all returned plus-side performance.

Rates/Yields

Longer-dated Treasury yields rose over the week—the two-,three-, five-, seven-, and 10-year Treasury yields each climbed over 10%.

The overall Treasury yield curve has flattened dramatically since a year ago—the two- and five-year Treasury yields are up 574.8% and 280.11%, respectively.

The U.S. 30-year fixed-rate mortgage average ticked up to 3.11%, a 1.97% increase from last week. Both the United States Dollar Index (DXY, +0.25%) and VIX (+15.58%) increased over the week.

Market Recap

Our fund-flows week kicked off Thursday, December 30, with U.S. equity markets starting in the green but falling slightly to end the day—S&P 500 (-0.30%), DJIA (-0.25%), NASDAQ (-0.16%), and Russell 2000 (-0.02%). Going into the holidays, investors were worried about the more than 1.44 million infections worldwide of the highly infectious Omicron COVID-19 variant. Airlines canceled thousands of flights. The Department of Labor’s (DOL) first-time unemployment filings reported 198,000 claims (versus the expected 206,000)—the four-week moving average of claims was the lowest reported total in 52 years.

On the last trading session of 2021, U.S. equity markets closed lower for the second straight day. The NASDAQ (-0.61%) was the laggard of the U.S. broad-based indices. Treasury yields also fell for the second consecutive session—the five- (-1.26%) and 30-year (-1.87%) Treasury yields dropped by the largest percentage on the day. The price of oil also declined, West Texas Intermediate (WTI) fell to $75.52 a barrel (-1.90%).

On Monday, the first trading day of 2022, Treasury markets suffered a selloff as yields rose all along the curve—the 10- and 30-year Treasury yields rose by 8.81% and 6.78% respectively. The 10-two Treasury yield spread increased by 10.18%, marking its largest daily spike in more than one year. The “January Effect”—the equity market’s supposed monthly bump due to end-of-year tax-loss harvesting—seems to have gotten the year off on the right foot. The Russell 2000 (+1.21%), NASDAQ (+1.20%), DJIA (+0.68%), and S&P 500 (+0.64%) all ended the session in the black—both the DJIA and S&P 500 touched new record highs.

Tuesday, January 4, saw longer-dated Treasury yields rise once again, hurting many technology issues—NASDAQ (-1.33%) finished the day in the red. The DJIA, however, set a record for the second consecutive day after gaining 0.59%. Tuesday also saw the publication of the DOL’s JOLTS report. The report highlighted there were roughly 1.5 million job openings for each unemployed person—10.6 million openings versus the 6.9 million unemployed.

Our fund-flows week wrapped up Wednesday, January 5, with the Federal Reserve meeting minutes showing the Fed is considering increasing interest rates sooner than expected—the 10-year Treasury yield jumped for the third straight day and touched its highest level since May. The NASDAQ fell 3.34%, marking its worst daily session since February. The Mortgage Bankers Association (MBA) reported mortgage application volume fell 2.7% from the week ending December 17 as both applications and refinancing appear to be slowing…ReadMore…