The sun rises behind the Lincoln Memorial, Washington Monument, and U.S. Capitol in Washington, D.C., U.S., seen from Arlington, Virginia, U.S., November 12, 2025. REUTERS/Al Drago
Index Performance
At the close of the LSEG Lipper fund flows week ending November 19, 2025, U.S. broad-based indices were negative across the board. The S&P 500 Total Return Index declined 2.86%, followed by the Dow Jones plunging 2.43%. Nasdaq faced the biggest reduction of 3.94%. The deceleration was due to the strong index allocation towards AI-linked mega-cap securities, which came under renewed pressure for a third consecutive week. Investor tone toward large-cap growth has shifted meaningfully, with profit-taking evident across several of the market’s most crowded names.
Broad-based fixed income indices recorded a slight uptick, as all major indices ended the period with mixed results across the board. The FTSE High Yield Total Return Index had marginal gain of 0.01%, while the FTSE Municipal Tax-Exempt Investment Grade Bond Index remained flat for the period. The FTSE U.S. Broad Investment Grade Bond Total Return Index rallied 0.44%.
Macro Viewpoint
Data returns. With federal operations resuming, attention has quickly shifted back to the incoming economic releases. The first major update shows that nonfarm payrolls rose 119,000 in September, well above the 50,000 Reuters estimate, suggesting labor demand remains positive, at least on the surface.
However, despite stronger-than-expected headline values for the prior months, there were revisions to the July and August data, which indicate a softer labor backdrop. July payrolls were revised down by 7,000 from 79,000 to 72,000 and August was revised down by 26,000, turning an initially reported gain of 22,000 into a 4,000 decline. The downward revisions signal that momentum heading into September was weaker than expected.
The unemployment rate increased by 1.0 ppt to 4.4% in September, the highest level since 2021. The reported unemployment rate is well above Reuters’ expectations of 4.3%. While the increase is small month to month, the unemployment rate now stands 0.3 ppts above year-ago levels.
Given the rising uncertainty within the U.S. and underlying weakness in the labor data, it is more than likely investors can expect the downward trend to continue. The release of this labor data should be the catalyst supporting a rate-cut decision at the upcoming FOMC meeting.
On the Yield Front
From a yield standpoint, there was a marginal shift in yields. The two-year declined 4 basis points, the five-year fell 5 basis points, and the 10-year stumbled 4.2 basis points, while the 30-year also declined 1 basis points.
Fund Flows by Asset Type
Investors are beginning to emerge from the sidelines, allocating back into risk assets that have been repriced amid the recent AI-driven selloff. With mega-cap securities resetting lower, buyers are strategically purchasing growthier names at what many view as discounted entry points. Reflecting this shift, U.S. money market funds saw $24.7 billion in outflows, a sharp reversal from the $118 billion inflow record the prior week. U.S. equity funds were the winners this time, with $8.5 billion in net flows, with $7.9 billion coming from U.S. large-cap alone, which signals a renewed appetite for high-quality growth at lower prices.
Within fixed income, U.S. taxable bonds funds extended their winning streak for the fifth consecutive week, adding $2.3 billion. As for U.S. municipal bond funds, their impressive winning steak has come to a close, with an outflow of $905 million, which reflects a shift in tone for tax-exempt income. Commodity funds had a narrow gain of $158 million. Let’s see if commodities can pick up steam and gain momentum going into the end of the year. The downward steak with U.S. alternatives continues as the classification reported a net outflow of $276 million.
