Capital is returning to certain fixed income sectors. Fund flows are quite uneven however, with the corporate sector remaining investors' favorite. In particular, high yield bonds have recouped a great deal of the recent outflows.
In contrast, muni bonds have seen almost no new net inflows. The little problem in Detroit is not helping the situation and the SEC going after the city of Miami has made the sector look quite unappealing.
Outside of Treasuries, fixed income performance these days is extremely sensitive to fund flows. And the returns over the past month (June 20th - July 19th) fully reflect these dynamics in mutual funds and ETFs.