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There were a net $10.3 billion of inflows into equity funds in
the week to Wednesday, with investors putting $5.1 billion into
tech stocks, the most since May, and $4.9 billion into emerging
market stocks, BofA said on Friday, citing data from provider
EPFR.
Investors have been buying stocks on increasing hopes that the
U.S. economy will achieve a soft landing - slowing enough to
bring inflation back to the Federal Reserve's target, but not
dramatically.
However, the aggressive pace of Fed rate hikes that has helped
slow inflation along with pandemic-era stimulus, has weighed
heavily on U.S. Treasuries, which are set to decline in value
for the third straight year, something that "has never occurred
in the 250-year history of the U.S. republic," according to
BofA's calculations.
The flows into equities have also been narrowly based, with tech
stocks accounting for $34 billion of inflows year to date,
vastly ahead of the next largest sector, consumer stocks, with
$4 billion in inflows.
This means, the breadth in global markets is "breathtakingly
bad" BofA said, with MSCI's All Country World index at its
narrowest since 2003.
The data also showed there were also $6.5 billion of inflows to
cash in the week to Wednesday, $1.7 billion of inflows to bonds
and $300 million of outflows from gold, in this time.
BofA's "bull-bear' indicator rose to a five month high of 4.4
thanks to the flows into emerging market stocks.
(Reporting by Alun John; Editing by Amanda Cooper)
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