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"You don’t get more Goldilocks than that," the report said of
Thursday numbers that showed U.S. consumer prices dipped by 0.1%
month on month and unemployment claims were a muted 205,000, a
reference to something being "just right" as in the fairy tale.
The lower CPI data offered hope that inflation was now on a
sustained downward trend, which should allow the Federal Reserve
to further scale back the pace of its interest rate increases
next month.
Bofa also pointed to the impact of China reopening its borders
after COVID-19 restrictions, lower EU energy prices and
encouraging U.S. fiscal and labour market data, as all factors
behind the moves.
The report found there were weekly flows into funds investing in
bonds ($17.5bn), cash ($8.3bn), and stocks ($7.2bn), and out of
gold ($0.4bn).
BofA also said there were the largest inflow to investment grade
bonds since July 21 ($10.4bn), and the largest inflow to
emerging market debt and emerging market stocks since April 22
($3.6bn).
The analysts said the moves were a "classic January reversal"
with the "2022 losers of crypto, (US Treasuries), China, credit
(and) stocks smashing '22 winners of cash (and)commodities".
Europe's benchmark STOXX index is trading at nine month highs,
Hong Kong's Hang Seng Index is at a six month top, and even
bitcoin hit its highest in two months after the U.S. inflation
data.
"Flows show the chase is on," said Bofa
(Reporting by Alun John, editing by Lucy Raitano and Angus
MacSwan)
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