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During the week to May 12, Treasury Inflation-Protected
Securities (TIPS) funds saw the largest inflow in 23 weeks,
taking in $1.9 billion, BofA said, citing EPFR data on fund
flows.
At the same time, equity funds dedicated to interest
rate-sensitive tech stocks saw their first outflow in five
weeks, albeit only $17 million.
Typically, the premium investors are willing to pay for these
so-called growth stocks, shrinks during a economic rebound when
inflation and interest rates rise.
So far in the second quarter of 2021, the Nasdaq index, home to
fast-growing tech companies has been roughly flat,
underperforming the S&P 500 where "cyclical" companies such as
banks and travel firms have posted strong earnings.
Benchmark 10-year Treasury yields have nearly doubled since the
beginning of the year, rising from 0.9% to a high of 1.77% at
the end of March before retreating to about 1.65% this Friday.
"2020 marked (a) secular low point for inflation and interest
rates", the BofA note read, arguing that 2% ceiling for U.S.
inflation in the was past 10 years could now be considerd as a
new floor.
On Wednesday, data showed U.S. consumer prices increased by the
most in nearly 12 years in April as booming demand amid a
reopening economy pushed against supply constraints.
All in all, equity funds saw $25.7 billion in inflows, while
$13.6 billion went into cash and $6.9 billion went into bonds,
BofA said.
(Reporting by Julien Ponthus; Editing by Dhara Ranasinghe)
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