ETF Flow Report

May 2022 Flow Report

Commentary from the Desk:

For the month of May 2022, main market topics were about high inflation and the action taken by central bankers to rein it in. German hit an all-time high at 8.7%. The recession risk tends to be higher in the Euro area given the combined effects of a rising inflation - driven by higher energy prices due to the continuing war- and a declining growth. Natural Gas, Coal and Oil gained 152%, 118% and 52% respectively YTM. The Fed rose its interested rates by 50bps at its May 4th meeting. It has also started shrinking its balance sheet with an initial monthly cap of 47.5bn – rising to $95bn after 3 months. In a rising interest environment, information technology – referred as growth stocks – looks less attractive. To that extent, we have seen activity on NASDAQ related names.

May Performance highlights

Equity Indices: NDX: -6.05%, SPX: -3.62%, MSCI WORLD: -2.47%, STOXX 600; -.83%, SX5E: +.32%, FTSE100: +1.31%, DAX: +2.92%,

Bonds: German 10Y yield: +22.2bps, US10Y Yield: +2.2bps

Commodities: Gold: -10.63%, Oil: +14.17%, Wheat: +1.18%

FX: DXY: -1.81%, USDEUR: -2.18%, USDJPY: -1.67%

From a regional perspective, Japan and UK equity indices were in favour while European equity as well as US and International DM indices were sold. On the fixed income side, there was demand both in US and EU bonds.

More specifically,

On Equity indices: the MSCI JAPAN, FTSE100 were bought while the S&P500, MSCI WORLD, Eurostoxx 50 and STOXX 600 ERUROPE were sold. The US tech NASDAQ recorded a mixed activity.
On the Fixed income: The US Treasuries 1-3Y, 3-7Y and 7-10Y were in favour while the longer term of the curve saw buys and sells. 5-7Y Euro Govies were out of favour. Inflation linked indices – both EUR and US – were sold.

Sources: Bloomberg RFQE, Tradeweb, DRW - May 2022

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