Equities saw the fifth-largest inflow on record last week, totaling $47.7 billion, Bank of America revealed in a new weekly report.
For the week ending July 17, bond funds also experienced substantial inflows, attracting $21.6 billion. Cash investments saw a notable influx of $4.6 billion, while cryptocurrency investments rose by $1.7 billion. Precious metals resumed their positive trend, with gold witnessing the largest inflow since March 2022 at $1.8 billion.
The technology sector continued to lead equity inflows, receiving $2.4 billion, marking its third consecutive weekly gain. Financials and materials followed, with inflows of $1.3 billion and $1.2 billion, respectively. Small-cap stocks also gained traction, recording the second-largest inflow ever at $9.9 billion.
Regionally, U.S. equities dominated, with $44.8 billion in inflows, the fourth largest on record. In contrast, European equities faced outflows for the ninth consecutive week, losing $1.4 billion. Japanese stocks saw a modest inflow of $0.1 billion, while emerging markets maintained positive momentum with $3.1 billion in inflows over the past seven weeks.
By investment style, U.S. large-cap funds continued to attract the most attention, pulling in $27.4 billion. U.S. small-cap funds also saw significant interest, with $9.9 billion in inflows. However, U.S. growth funds experienced a modest inflow of $0.8 billion, while value funds saw a marginal $0.1 billion increase.
From a macro standpoint, analysts at Bank of America said that soft landing expectations are increasing, with consensus anticipating any U.S. economic slowdown to be temporary and rate cuts to have a swift impact.
Analysts highlighted that investors are “bullishly assigning 100% probability of Fed rate cut” at the September meeting. Meanwhile, the probabilities of Trump winning the upcoming election and U.S. economy staging a soft landing now sit at 75% and 68%, respectively.
However, Bank of America still advises to "sell the first rate cut" for credit and stocks as the likelihood of a hard landing grows due to the trajectory of the U.S. labor market, consumer spending, and capital investment.