According to a recent report by BofA Global Research, U.S. fixed income funds experienced robust inflows, particularly into long-term sovereign and corporate 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 trend is further supported by a $13 billion increase in custodial holdings at the Federal Reserve, suggesting a shift by foreign officials from 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 rotation in response to recent market dynamics. The report underscores the ongoing demand for U.S. Treasuries as investors seek to capitalize on potential yield opportunities amid a flattening yield curve.