In their weekly report, Bank of America's strategists noted a diverse flow of funds across asset classes for the week up to March 6.
Money market funds lead with significant inflows, pulling in $30 billion. Bonds followed with $17.3 billion, stocks attracted $6.9 billion, and cryptocurrencies saw inflows of $1.9 billion.
Interestingly, gold experienced outflows of $1 billion, according to Bank of America, referencing EPFR Global data.
Despite a generally positive trend with stocks enjoying a seventh consecutive week of inflows totaling $91 billion—the strongest streak in two years—technology funds faced the “largest outflow ever” of $4.4 billion,” the strategists highlighted.
This marks the first outflow in nine weeks for the technology sector.
The strategists said that the Federal Reserve's rate cut decisions are influential, with the stock market witnessing a “ferocious” 25% gain in just 25% months.
This “has happened just 10 times since 1930s, normally such surges occur from recession lows or start of bubbles,” the strategists wrote.
While acknowledging that gains that appear stretched, historical data suggests that bubbles may expand even further, they added.
“Fed causes bubbles & Fed pops bubbles and in 2024 Fed’s determination to cut rates means “we’re not too far from it”,” the analysts explained.
Meanwhile, real estate funds received their largest influx since January 2022, amounting to $1.2 billion.
On a regional basis, US outflows totaled $100 million, whereas emerging markets (EM) stocks welcomed $3.1 billion back. Japan continued to attract funds for the eighth week with $1.2 billion, while Europe saw its tenth consecutive week of outflows, also totaling $1.2 billion.
In the fixed-income sector, investment-grade (IG) bonds saw their 19th week of inflows with $13.3 billion, and high-yield (HY) bonds resumed attracting funds with $1.3 billion. Treasury bonds witnessed a fourth week of inflows at $3.1 billion, contrasting with emerging market debt, which experienced its fourth week of outflows, losing $1 billion.