Investors purchased bonds, stocks, and inflation hedges during a hectic central bank week, according to BofA.
Investors Flock to Stocks and Bonds
By Samuel Indyk
LONDON (Reuters) – Investors flocked to stocks and bonds in the week to Wednesday, Bank of America global research said in a report on Friday citing EPFR data.
Ahead of policy announcements from the Federal Reserve, European Central Bank and Bank of Japan, there was a $13.8 billion inflow to stocks and $11 billion into bonds, BofA said, while TIPS (Treasury Inflation-Protected Securities) saw their first inflow since August 2022.
“Interesting to see inflation hedges back on after CPI 9% to 3% drop since autumn’22,” BofA analysts said.
The Fed on Wednesday raised its interest rate to its highest in 22 years, but signalled the peak in rates may have arrived, meanwhile the ECB also fanned talk of a September pause as inflation has shown tentative signs of easing and growth worries mount.
The BOJ on Friday made its yield curve control policy more flexible, a move that analysts said could be a small step towards exiting years of massive monetary stimulus in subsequent meetings.
Japanese stocks saw an outflow of $0.1 billion, the first outflow in eight weeks, BofA said.
The BofA bull and bear indicator, a measure of market sentiment, rose to 4.0 from 3.8, the highest level since the U.S. regional banking turmoil in March, as five of the six indicator components signal “bullish” sentiment or very close to it.
Cash allocation of 5.3% was still a drag, BofA said.
The weekly data showed $40.6 billion of flows into cash, taking total month-to-date inflows to $104.1 billion.
(Reporting by Samuel Indyk; Editing by Amanda Cooper)
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