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U.S. large caps saw $15.8 billion of outflows in the week, while
stocks in general saw outflows of $19.6 billion, Bank of America
said in its weekly round up of flows in and out of world markets
using EPFR data.
The week to Wednesday covered last Thursday's tumble on Wall
Street on hawkish remarks from Federal Reserve officials and oil
nudging above $90 a barrel, and this Wednesday's stocks selloff
on stronger-than-expected U.S. inflation data. [.N]
After that data, markets pushed back expectations for a Federal
Reserve rate cut to September from June - though pricing is
volatile - which has ramifications for other central banks,
including those in Europe.
Japanese stocks saw their first weekly outflow in over three
months, though even after these outflows, major equity markets
in the United States, Japan and Europe remain at or close to
record highs.
On the broader outlook, the BofA report described how the
"Anything But Bonds" mood has driven demand for inflation hedges
such as gold - currently also around record highs - and
'monopolistic cash flows' supporting flows to large U.S. tech
stocks.
According to BofA calculations, the 10-year annualized return of
U.S. Treasuries is at 65 year lows, as this decade marks the end
of a "40-year bond bull".
"2020s era of war, protectionism, fiscal excess, scarce energy,
housing (and) labor (equals) higher inflation and higher cost of
capital until recession sparks "buy bond humiliation," the BoFA
note said.
U.S. 2-year Treasury yields, sensitive to interest rate
expectations, are near five-month highs and have climbed almost
70 basis points this year. Ten-year Treasury yields are up
around 79 bps so far this year.
(Reporting by Alun John; editing by Dhara Ranasinghe)
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