Video Series:

Macro asset-classes

“Unless the equity fund flow picture slows materially from here, our equity demand/supply analysis implies further equity upside for this year.” Nikolaos Panigirtzoglou, Global Markets Strategy

Equities: The retail impulse into equities accelerated this year with the YTD annualized pace of equity fund buying globally tracking above $1 trillion, the highest on record by far. Assuming the YTD pace of equity fund flows continues into the second half of the year, this would lift the projected equity demand/supply improvement for 2021 from $1.1 trilion to $1.3 trillion.

Bonds: We believe the YTD annualized pace for bond fund buying is tracking $1 trillion, matching the record high of 2019. This would represent an improvement of around $300 billion in bond fund demand vs. 2020 which translates to a $1.3 trillion deterioration in the global bond supply-demand balance this year. This in turn implies upward pressure on Global Aggregate Bond Index yields of around 40bp for 2021. Current YTD increases are around 27bp, which is just over 60% of the increase implied by the supply-demand analysis.

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