Last week’s (Wed-Wed) review of funds’ in/outflows as % of funds’ AuM.    The shift in tone of central banks caused Euro area real bond yields to rise by 30basis points from their mid-June trough, causing equity and bond markets to selloff.As a result investors pulled money from European equity funds for the firsttime in 15weeks, and ending the longest run of money into the fund class sinceDec'15. The run had mostly been a combination of past European market strengthas well as reduced political uncertainty, but in its later stage was supported byconsiderable US equity fund redemptions, as US macro surprises fell to a six-yearlow. Now however, US surprises look to have bottomed out, removing the tailwindfor non-US regions (Fig. 1), while at the same time we expect Euro area macrosurprises to turn negative, weighing on Europe's equity flow momentum (Fig. 2).    The rise in yields also led sovereign bond funds to their highest weekly outflowssince end of February. Notably this was driven by US mandates whereas Europeansovereign bond funds gained. European investors have for long been facingnegative yields which, as a result, pressed them moving money to higher-yieldingregions outside Europe, especially the US. With German 10-year bond yieldscurrently 30bps above their mid-June trough levels and expectations for the ECBto turn gradually less dovish over the coming months, bond regions outsideEurope looked relatively less attractive.

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