An airplane takes off from New York’s Laguardia Airport after the FAA ordered flight cuts at 40 major airports amid the ongoing U.S. government shutdown in the Queens borough of New York City, U.S., November 7, 2025. REUTERS/Ryan Murphy TPX IMAGES OF THE DAY
Index Performance
At the close of the LSEG Lipper fund flows week ending November 5, 2025, U.S. broad-based indices were negative across the board. The S&P 500 Total Return Index declined 1.61%, followed by the Dow Jones (-1.21%). The Nasdaq was the biggest decliner (-3.04%), as technology companies with high exposure to artificial intelligence faced a minor correction. The Russell 2000 Index also declined 1.86%, driven by a steep decline in small-cap companies.
Broad-based fixed income indices experienced a softer tone this week, as all major indices ended the period with mixed results across the board. The FTSE High Yield Total Return Index declined by 0.39%, while the FTSE Municipal Tax-Exempt Investment Grade Bond Index had a marginal increase of 0.08%. The FTSE U.S. Broad Investment Grade Bond Total Return Index remained flat for the period.
Macro Viewpoint
The prolonged U.S. government shutdown is exerting renewed pressure on the airline industry. Transportation Secretary Sean Duffy has warned that, without a resolution in the near future, he will impose a 20% reduction in U.S. airline operations as air-traffic controllers and TSA agents continue working without pay, which is an increase from the initial 10% cut previously announced. The resulting disruptions will further exacerbate an industry that is recovering from post-pandemic volatility. Extended shutdowns would likely erode consumer confidence and discretionary travel demand, with the potential to affect other travel-related industries. A forced reduction in travel will compress margins, which would prompt analysts to revise earnings forecasts downward should the shutdown persist into the holiday season.
On the Yield Front
From a yield standpoint, Treasuries moved within a tight band across maturities. The two-year declined 5 basis points, the five-year fell 3.8 basis points, and the 10-year stumbled 0.8 basis points, while the 30-year yield increased 3.2 basis points. Meanwhile, the U.S. dollar weakened 0.20% as a modest pullback in real yields weighted on the dollar.
Fund Flows by Asset Type
Investors, “ran for cover” and took a more defensive approach this week. U.S. money markets funds recorded a massive $118 billion in net inflows, a sharp acceleration from the $23.2 billion in the prior week, as rising uncertainty surrounding the U.S. government shutdown pushed investors cash assets. Meanwhile, U.S. equity funds attracted a strong $14.9 billion, up from the $9.9 billion in the previous week, marking a third consecutive week of positive flows. Within equities, U.S. large cap strategies led the charge, with majority of the favorable inflows coming from S&P 500 index funds. Despite a modest pullback in companies with high exposure to artificial intelligence, risk appetite within the large-cap universe remains resilient, for now.
Within fixed income, U.S. taxable bond funds extended their winning streak for a fourth consecutive week, adding $1.3 billion, a large decline from the prior week’s $6.7 billion. In comparison, U.S. municipal bond funds posted their fifth consecutive week of gains, with $1.2 billion in net inflows, reflecting strong demand for tax-exempt income. Commodity funds snapped a four-week streak, with an outflow of 286.1 million, a steep decline from the $5.3 billion inflow the previous week. U.S mixed assets is back in negative territory after breaking an eight-week negative streak and marginally entering positive waters in the following week. U.S. mixed asset funds had an outflow of $399 million, and U.S alternative funds had a small inflow of $29 million.
