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BofA: Cash sees largest inflows in two months, positive equity flows resume

Published 07/05/2024, 05:32 AM
Updated 07/05/2024, 05:34 AM
© Reuters.  BofA: Cash sees largest inflows in two months, positive equity flows resume

Cash witnessed inflows of $51.9 billion last week, the largest in two months, according to Bank of America’s Friday report.

For the week leading up to July 5, equity funds experienced $10.9 billion in inflows and bond funds attracted $19.0 billion, the strongest since February 21.

Moreover, gold drew $1.0 billion, and cryptocurrency investments received $0.5 billion, the report states. This was the largest inflow for gold since March 2024 at $1.0 billion, and the biggest two-week inflow since April 2022.

The technology sector continued to attract positive sentiment, with its weekly inflows resuming at $1.8 billion. For the broader equity market, inflows continued for an 11th consecutive week, marking the “longest streak since December 2021,” BofA strategists noted.

BofA highlighted that the market has been influenced “as Trump sweep probability increased,” with rate volatility, yield curve steepeners, banks, and technology stocks being the main beneficiaries.

On the flip side, the 30-year US treasury yield, homebuilders, renewables and EM currencies have been negatively affected “as investors focus on fiscal stimulus/tax cuts first & tariffs second,” strategists wrote.

“Note that past election "surprises"/"sweeps" caused 20-40bps yield curve steepening in 4 weeks,” they added.

Meanwhile, regional flows varied last week, with US equities resuming inflows at $7.4 billion, while Japan and Europe continued to face outflows at $2.2 billion and $0.1 billion respectively. Emerging market (EM) equities, however, enjoyed inflows for the fifth consecutive week at $0.6 billion.

By investment style, US large-cap funds led with $16.6 billion in inflows, while US small-cap and US growth funds faced outflows of $0.9 billion and $4.4 billion, respectively. US value funds also saw outflows of $1.1 billion.

In fixed income, investment-grade (IG) bonds recorded inflows for the 36th consecutive week at $12.5 billion, marking the largest inflow since March 2024. High-yield (HY) bonds saw a resumption of inflows at $0.4 billion, and TIPS (Treasury Inflation-Protected Securities) also recorded inflows at $0.1 billion after five weeks.

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