According to a recent report by BofA Global Research, U.S. fixed income funds have experienced robust inflows, particularly into long-term sovereign funds, reflecting a flattening bias in the yield curve. The report, dated February 3, 2025, notes that while short-term U.S. Treasury (UST) fund inflows have cooled, intermediate- and long-term UST fund inflows have picked up. This shift is underscored by a $13 billion increase in custodial holdings at the Federal Reserve, suggesting foreign officials are rotating out of reverse repo programs into longer-duration USTs for yield enhancement. "Custodial holdings at the Fed added $13bn USTs while foreign RRP usage declined by $18bn on the week," BofA analysts highlight, indicating a strategic move towards longer-term securities. This trend aligns with the broader market dynamics, where futures positioning shows a mixed moneyness across contracts, with a net out-of-the-money position in flatteners.