Global equity funds shed $7.05 billion in the week ending March 11 — their steepest weekly outflow since December 2025 — as Brent crude's first close above $100 since August 2022 drove a broad capital rotation out of equities and into money markets and short-duration bonds. LSEG Lipper flow data published March 13 reveals that the rotation was not a panic but a measured repositioning: investors moved to lower-risk instruments while preserving liquidity ahead of a week packed with central bank decisions.
Brent settled at $103.14 per barrel on Friday — a 2.67% single-day gain — while WTI front-month closed at $98.71, up 3.11%. The CBOE VIX index reached 28.15 during the week, its highest reading since November 2025, reflecting elevated uncertainty around the Strait of Hormuz and the trajectory of US monetary policy. The MSCI World index declined 0.9% on Friday, extending a three-week run of losses.
Equity Markets: US, Europe, and EM All Bleed
The week's equity outflows were geographically broad. US equity funds posted $7.77 billion in net redemptions — a second consecutive week of outflows — as the S&P 500 fell to 6,672 and the Nasdaq shed 1.78% on Friday. European equity funds saw $7.71 billion exit, as the energy import burden weighed on growth expectations across the eurozone and the Euro STOXX 600 dropped 0.5% on the final session. As documented in our earlier coverage of the week's global equity selloff, the losses were sharpest for energy-importing economies where Brent above $100 directly compresses corporate margins and household spending.
Emerging market equity funds also turned negative, with $2.69 billion in net outflows that snapped an 11-week consecutive inflow streak. Dollar strengthening — the US Dollar Index gained 0.8% on Friday and has now posted back-to-back weekly advances — is a material headwind for EM economies carrying dollar-denominated debt. Separately, the intensifying sanctions on Iran's shadow oil fleet are compounding cost pressures on Asian EM importers who previously accessed discounted Iranian crude through unofficial channels. — US Foreign Policy
The Rotation: Where Capital Went
The outflow narrative is only half the story. Money market funds absorbed $6.93 billion in inflows during the week — their seventh consecutive week of net gains — underscoring that investors are not exiting markets entirely but rotating to cash equivalents that preserve optionality. Short-term bond funds attracted $5.75 billion, a four-week high, while global bond funds pulled in $5.72 billion despite that figure representing a ten-week low in the category.
The sectoral picture adds further texture. Industrial sector funds attracted $1.31 billion in inflows, reflecting the defense and infrastructure premium embedded in the Iran conflict narrative. Financial sector funds shed $2.31 billion while healthcare funds lost $1.31 billion — both categories sensitive to a repricing of interest rate paths. The high-yield bond segment saw $3.17 billion in net outflows, its largest weekly decline since mid-April 2025, as credit spreads widened in response to the combined inflation and growth uncertainty.
"Headlines are coming at the market like water from a fire hose, which is impacting the price of oil, and consequently, financial markets."
— Mitch Reznick, Group Head of Fixed Income, Federated Hermes, March 13, 2026
Asia: A Counterpoint
Against the global tide, Asian equity funds recorded $6.15 billion in net inflows — the sharpest regional divergence in the LSEG Lipper data. The figure partly reflects the $68 billion Korean market stabilisation fund's continued effect on KOSPI positioning, but also captures renewed interest in markets that sold off disproportionately in the first two weeks of the conflict. Aberdeen Investments' Ray Sharma-Ong noted that "the recent decline in North Asian equity markets appears disproportionate relative to underlying fundamentals," and that stabilisation in geopolitical risks could "lead to a sharp recovery in the region." The same rebalancing logic explains the relative outperformance in Chinese equities, where domestic policy support and a modest improvement in property sector sentiment offset external headwinds.
Bond Markets and the Policy Trap
Treasury yields moved in a compressed range on Friday after several volatile sessions. The 10-year yield settled at 4.283%, down 3.3 basis points on the day after hitting a six-month high the prior session, while the 30-year bond held at 4.87%. Markets are pricing just 20 basis points of Fed easing for the entirety of 2026 — halved from 50 basis points expected a month ago — reflecting the central bank's inability to cut into an oil-driven inflation impulse. Analysts now project US headline CPI could reach 4.5% by Q2 2026 if crude prices remain elevated.
Ellen Zentner, chief economic strategist at Morgan Stanley Wealth Management, flagged that despite January PCE printing in line at +0.3% month-on-month and Q4 2025 GDP being revised lower, "more sticky inflation data simply strengthens the idea that the Fed will remain on the sidelines." The US government's debt load exceeding $36 trillion and widening auction sizes are creating structural upward pressure on long yields independent of the oil shock. For a deeper look at how the Fed and ECB are navigating this bind, see our earlier analysis of central bank rate-path resets.
For US market context — including the S&P 500's third straight weekly loss, WTI pricing near $98, and the PCE/GDP data revisions — see the companion analysis at Markets Log Third Straight Weekly Loss on US Market Updates.
What to Watch
The coming week brings the most policy-dense calendar of 2026. The Federal Reserve, European Central Bank, Bank of Japan, and Bank of England all hold scheduled meetings, and each faces a version of the same dilemma: oil-driven inflation on one side, slowing growth data on the other. Any shift in forward guidance — particularly from the Fed on the pace of potential 2026 cuts — will reset the fund-flow picture materially. On the commodities side, Hormuz shipping data, OPEC+ supply signals, and US SPR release decisions will determine whether Brent consolidates above $100 or retreats toward the $90–$95 range that most models treat as a more neutral pass-through inflation level. Investors should also watch EM FX closely: if the dollar continues its rally and oil stays elevated, the 11-week EM equity inflow streak that just broke could be difficult to rebuild in the near term.
