Good news continues! Investors are returning to risky assets, and American stock funds are seeing a large inflow of funds.

Noticeably, according to data from LSEG, in the week leading up to December 25th, US stock funds experienced strong inflows of funds, quickly rebounding from the massive sell-off in the previous week. This shift was attributed to a cooling off in inflation reports, the passing of a temporary funding bill to avoid a government shutdown, and what the market refers to as the "Santa Claus rally". Based on LSEG's data, US stock funds saw net inflows for seven out of eight consecutive weeks, with a total net inflow of $20.56 billion. This is a significant change compared to the $49.7 billion net outflow from the previous week. Last Friday, a report from the US Department of Commerce showed that the Personal Consumption Expenditures (PCE) Price Index only rose by 0.1% in November, lower than analysts' expectations. This data renewed hopes in the market for further interest rate cuts by the Federal Reserve next year and boosted the US stock market. Additionally, the US stock market typically benefits from the "Santa Claus rally" in the final week of each year. However, investors focused their funds on large-cap US stock funds, with a net inflow of $31.67 billion, the highest level since October 2nd, while the previous week saw a net outflow of $20.94 billion. At the same time, small-cap stock funds, mid-cap stock funds, and diversified stock funds saw outflows of $2.95 billion, $1.17 billion, and $0.853 billion respectively. Sector stock funds also saw a net outflow of $2.14 billion, with healthcare and non-essential consumer goods funds leading in net sales at $0.495 billion and $0.476 billion respectively. US bond funds saw a second consecutive week of outflows, with investors withdrawing a net of $5.42 billion. In various market segments, emerging market debt, short to mid-term investment grade, and municipal bond funds saw respective net outflows of $0.924 billion, $0.899 billion, and $0.879 billion. On the other hand, short to mid-term government and treasury funds saw an increase in inflows, attracting $0.957 billion of funds. Meanwhile, investors showed strong interest in US money market funds, attracting a net inflow of $4.172 billion, a sharp contrast to the $2.731 billion net outflow from the previous week.