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Bond funds overall pulled in $17.5 billion in
the week to Wednesday, their second biggest week of inflows on
record, the bank said citing EPFR data. Bond funds have
attracted $183 billion since the start of 2019.
An "investor capitulation into government bond funds" saw
sovereign securities draw in their second largest inflows ever
at $8.9 billion, BAML said.
Meanwhile equity funds suffered $10.3 bln of outflows with
year-to-date outflows amounting to $155 billion. Across sectors,
tech-oriented equity funds lost $1.1 billion, their biggest
weekly outflows this year, while funds focused on defensive
stocks such as consumer, real estate and utilities all enjoyed
inflows.
Chief investment strategist Michael Hartnett said three risks
were looming large on the horizon.
"#1 Trump opts to be "Tariff Man" not "Jobs President," causing
recession; #2 Powell cuts send Fed into the policy impotence
club with ECB & BoJ; #3 Occupy Silicon Valley policies threaten
U.S. macro & market leadership," Hartnett wrote, referencing the
2011 "Occupy Wall Street" protest - a backlash against financial
inequality and the wealth of the largest U.S. financial
institutions in the wake of the financial crisis.
The wider risk-off mood also weighed on emerging market assets
which suffered outflows of $2.1 billion on the equity side, in a
seventh straight week of losses, and lost $700 million on the
debt side, BAML found.
The bank's "Bull & Bear" gauge has fallen to 2.5, indicating
cross-asset positioning is bearish, it added.
(Reporting by Karin Strohecker; Editing by Virginia Furness and
Susan Fenton)
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