Investing.com -- Investors poured $33 billion into cash last week while also directing $9.2 billion into equities and $3.3 billion into gold, according to the latest Flow Show report from Bank of America (NYSE:BAC).
Crypto saw its largest inflow of the year at $2.5 billion, while bonds recorded modest outflows of $0.7 billion.
Equity flows were positive across most regions except the U.S., where investors pulled $0.8 billion. Europe attracted $3.4 billion, while both emerging markets and Japan each received $1 billion.
Notably, BofA’s private clients reduced cash positions and shifted toward “deflationary defensives” like utility exchange-traded funds (ETFs), while reducing exposure to inflation hedges.
Despite the recent rebound in U.S. stocks and the dollar, BofA strategist Michael Hartnett retains a cautious stance.
“We remain H1 buyers of dips in bonds, international & gold, sellers of SPX/US$ rallies,” he wrote, reinforcing a stance that favors non-U.S. assets and defensive positioning.
Hartnett sees the recent rally as a “pain trade” driven by narrow leadership from mega-cap tech, but believes further upside in equities would require a combination of Fed rate cuts, geopolitical stability with China, and continued resilience in U.S. consumer spending.
“Sell hubris, buy humiliation,” Hartnett noted, highlighting that 304 S&P 500 constituents and 58 Nasdaq 100 names remain below their 2021–22 highs. This marks a reversal from what he calls “U.S. exceptionalism” to “U.S. repudiation,” with global capital beginning to rotate away from U.S. assets.
Spanish equities, on the other hand, are up 25% year-to-date in dollar terms, the strongest performance since the depths of the eurozone debt crisis.
Hartnett also views secular U.S. dollar depreciation as the “cleanest investment theme to play,” citing the rebalancing of global capital toward commodities, emerging markets, and international equities, particularly in China tech and European banks.
Among other key flows last week, Treasuries posted their biggest four-week inflow since March 2023 at $29.4 billion. Investment-grade and high-yield bonds saw continued outflows, while flows into TIPS and emerging market debt turned positive again.
Gold continued its strong momentum with inflows for the 15th consecutive week.
Regionally, European equity funds have now taken in over $31 billion year-to-date, while U.S. equity ETFs still dominate total inflows despite recent redemptions from mutual funds.
By sector, materials led with $2.5 billion in inflows, while financials, energy, and healthcare posted weekly outflows.