Follow The Flow: New pecking order

Research evidence excerpt

Follow The Flow: New pecking order

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Follow The Flow

New pecking order

Inflows into gov’t debt lead over credit 17 July 2026

As “risk-free” yields ascend, govies are in vogue. So far this year, in a world of higher Credit Strategy

yields on offer, investors have gravitated towards government debt more than credit. Europe

While inflows into credit funds have remained healthy against a backdrop of low rates Ioannis Angelakis

volatility, the higher yields on offer in sovereign debt markets are a boon for the asset Credit Derivatives Strategist

class. MLI+44 (UK)20 7996 0059

ioannis.angelakis@bofa.com

Over the past week… Barnaby Martin

High grade funds registered inflows for the 12th consecutive week. Inflows were Credit Strategist

MLI (UK)

recorded across the credit curve, while mid-term IG funds have seen the lion’s share of +44 20 7995 0458

the inflow. Inflows into the belly of the credit market have been non-stop for 14 weeks barnaby.martin@bofa.com

in a row now. High grade ETF funds have registered inflows for the past fifteen Mohit Agarwalla

Credit Strategist

consecutive weeks. MLI (UK)

mohit.agarwalla@bofa.com

High yield funds suffered their first week of outflows after four consecutive weeks of

inflows. For European-domiciled HY funds, Euro- and US-focussed funds recorded

marginal inflows over the past week. However Global-focussed HY funds were the ones

that underperformed recording notable outflows over the past week. HY ETFs suffered

from outflows last week breaking four straight weeks of inflows. Table 1:Weekly and YTD European

retail flows

Exhibit 1: Higher yields support government bond funds over credit Weekly fund flows data across assets

The higher the level of “risk-free” yields, the stronger the flow trend into gov’t debt over credit