“The reality is that after four weeks of outright risk off trade, long-only ETP flow patterns were significantly reversed during last week,” they said. “Long only equity ETPs received almost $11 billion of inflows by the end of Friday, while gold ETPs experienced the largest weekly outflows ($3.5 billion) since the recent gold surge began.”
Inflows to ETFs tracking cyclical sectors are another hint of improved sentiment, Deutsche Bank added.
“Although the surge in risk appetite was significant in terms of both performance and flow size, there hasn’t been any material changes in the economic outlook or monetary policy that we could see supporting a shift in the risk trade direction; therefore, we consider last week’s flow a warning more than a clear shift signal,” the analysts wrote.
“We believe that the next couple of sets of weekly cash flow data should give us more information to confirm last week’s flows as either a pause or the reversal of the risk off trade.”