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Flows into bonds reached $11.1 billion, the biggest since May
2018, $4.3 billion went into equities and $400 million were
pulled out of precious metals, marking the first drop in nine
weeks, according to the report based on EPFR data and tracks
fund flows from Wednesday to Wednesday.
It was also the biggest week of inflows in three years to
high-yield bonds with $4.8 billion and emerging market debt with
$4.4 billion.
BAML noted that since Jan. 2, investors have bought $36 billion
of bonds and sold $10 billion of equities. Among the risky asset
classes, there were buys of $16 billion of emerging market
equities and sales of $26 billion and $7 billion of U.S. and
European shares respectively.
Investors have piled into emerging market equities and bonds in
recent months amid expectations that the U.S. Federal Reserve
will not raise interest rates as quickly as previously expected
or even no longer tighten its policy.
(Graphic: EM BAML - https://tmsnrt.rs/2UTVbt9)
In the note, BAML chief investment strategist Michael Hartnett
told clients that in his view "the greatest threat to EPS
(earnings per share) in the next 3 years is an acceleration of
global populism via taxation, regulation & government
intervention".
BAML said its Bull and Bear indicator rose further into neutral
territory to 4.4.
The bank also said positions taken by private clients showed no
sign of the "irrational exuberance" experienced by markets
during the tech bubble, which grew at the end of the century.
"Since 2012, of every $100 invested by private clients, $55 has
gone into debt, $35 into equities, and $10 into cash &
alternatives," they wrote, noting no sudden rise in risky assets
in portfolios.
(Graphic: BAML flows by asset - https://tmsnrt.rs/2UI4aNQ)
(Reporting by Julien Ponthus; editing by Josephine Mason)
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