A screen displays the Dow Jones Industrial Average after the closing bell on the floor of the New York Stock Exchange, (NYSE) in New York, U.S., March 29, 2018. REUTERS/Brendan McDermid
At the close of LSEG Lipper’s fund-flows week ending September 17, 2025, U.S. broad-based indices rallied in greener pastures: S&P 500 TR (+1.24%), Nasdaq (+2.21%), Russell 2000 (+2.16%), and DJIA (+1.04%).
Macro Viewpoint
This year has been nothing short of historic. The U.S. economy has grappled with persistent inflation, a rising unemployment rate, a softening labor market, and a series of retaliatory tariffs that have strained global trade. Against this backdrop, the Federal Reserve announced a 25-basis point (bps) rate cut on Wednesday, lowering the federal funds target range to 4.00% to 4.25%. Chair Powell reiterated his data-dependent stance, underscoring that policy will be guided by tangible labor and inflation metrics rather than intimidation. The catalyst for this move was a string of weaker-than-expected summer job reports, and if labor market weakness deepens, the Fed may be forced to deliver additional cuts at upcoming FOMC meetings.
The market’s response was anything but uniform. The U.S. dollar initially tumbled on the headline, only to claw back losses and hover within a tight window throughout the week. In Fixed Income, yields nudged higher: the two-year Treasury rose 3.6 bps, while the 10-year climbed 4.3 bps, reflecting a reassessment of the Fed’s forward path. Meanwhile, gold surged to a new high of $3,704/oz before settling into a tighter $3,641 to $3,646 range, a signal of lingering investor demand for safety amid policy uncertainty.
Equities told a more nuanced story. Growth-oriented names led the initial selloff as markets grappled with the Fed’s decision, yet as the week progressed, investors’ strong risk appetite returned with force. Broad indices not only recovered but pushed to fresh highs, signaling that investors are willing to look through near term noise. The takeaway: While the Fed’s latest move marks a meaningful shift, the true test lies in where this cut signals the beginning of a sustained easing cycle or is this just a tactical adjustment?
Fund Flows by Asset Type
Ending the week equities faced a staggering $38 billion in outflows. At first glance, the figure looks daunting, but nearly $30 billion was concentrated in the iShares Core S&P ETF, suggesting the move was likely tied to a structural rebalance rather than a broad market rotation. Money Markets posted their second consecutive week of redemptions, shedding $23 billion, signaling that investors are reallocating across various risk asset profiles. U.S. Taxable Bond Funds absorbed $10 billion in new capital, while U.S. Municipal Bond Funds pulled in another $1 billion. Alternatives attracted $1.6 billion in net inflows, while Commodities cooled with $619 million, down from $907 million the prior week. Mixed Assets lagged once again, posting $143 million in outflows, reflecting a silent conviction in blended allocations.
Performance by Lipper U.S. Classifications
Within the Equity universe, Equity Leveraged Funds surged +6.32%, while China Regional Funds (+4.0%) and Alternative Energy (+3.99%) rallied on thematic repositioning. In contrast, healthcare underperformed across the board, leading the race was U.S. Health/Biotech which declined 0.5%, followed by Global Health/Biotech of (-0.44%). Utilities marginally declined 0.02%, as all eyes were on higher beta names.
Within the Fixed Income universe, credit is winning the race. Emerging Markest Local Currency Debt advanced +1.24%, supported by the softer dollar and renewed demand. Municipals also outperformed, as General & Insured Muni Debt gained 1.46%, and High-Yield Municipals increased 1.06%, reflecting favorable demand for tax-exempt debt. At the short end, returns were muted, Ultra-Short Obligation Funds rallied only +0.09%, followed by Short-Intermediate IG Debt (+0.06%) and Short-U.S. Treasuries (+0.05%).
