For the week ending May 8, Bank of America (BofA) analysts noted that cash, bonds, and stocks dominated inflows.
Cash saw a substantial weekly inflow of $67.8 billion after three weeks of outflows, while bonds attracted $17.8 billion, their largest inflow since July 2021.
Equity funds followed with $14.8 billion, driven by $20 billion into ETFs but offset by $5.2 billion in mutual fund outflows.
BofA said that credit markets, like stocks, are thriving in the current climate marked by “macro ambiguity & Fed asymmetry…but once govvies start outperforming credit, risk assets get toppy.”
Bonds experienced inflows for the 20th consecutive week, accumulating $17.8 billion, while precious metals faced their fifth consecutive week of outflows, shedding $0.7 billion. Bonds are “in secular bear” market, analysts noted, due to a mix of “inflation, fiscal excess, deglobalization.”
Meanwhile, gold faced a notable outflow of $0.7 billion, and cryptocurrency funds experienced a modest inflow of $0.1 billion.
Sector-wise, financials and materials each drew in $0.4 billion, consumer stocks saw $0.2 billion, and utilities gained $20 million.
Meanwhile, communication services lost $40 million, healthcare and energy each saw outflows of $0.2 billion, real estate shed $1.1 billion, and tech recorded its largest weekly outflow in seven weeks at $1.2 billion.
By region, the U.S. witnessed equity inflows for the third consecutive week, accumulating $9.1 billion. Japan also continued its streak with $2.2 billion in inflows over the same period, while Europe attracted inflows for the second consecutive week, adding $0.2 billion. Meanwhile, emerging markets experienced resumed outflows, with $0.6 billion leaving the region.
In the fixed-income category, investment-grade (IG) bonds continued their streak with the 28th week of inflows, attracting $7.3 billion and remaining “on course for record $440bn in '24,” analysts highlighted.
High-yield bonds achieved their largest weekly inflow since November 2023 at $3.4 billion, and municipal bonds witnessed their strongest inflow since January 2023, gaining $1.6 billion.
Government and Treasury bonds resumed inflows at $4.0 billion, while bank loans had their largest inflow since April 2022, reaching $1.8 billion.
However, TIPS outflows resumed at $0.2 billion, and emerging market debt saw outflows for the third consecutive week, with $0.7 billion exiting.
Corporate bonds continue their bullish trend, posting the “biggest outperformance vs govt bonds in 100 years,” since March 20, BofA pointed out.