Equities have experienced their most substantial weekly inflow since March 2022, driven by growing confidence in the consensus of a soft landing, according to Bank of America.
In the week to Wednesday, stocks attracted an inflow of $25.3 billion, while cash saw a $28.9 billion inflow. Bonds received a $4.8 billion inflow, while gold experienced an outflow of $600 million.
Money market inflows have reached a remarkable $1 trillion year-to-date, putting them on track for a record year in 2023. Treasuries have seen 31 consecutive weeks of inflows, the longest streak since 2010, and they are also on course for a record year with $144 billion in inflows year-to-date.
BofA analysts add that the significant inflows into money-market funds reflect a lack of conviction in the bear market thesis.
“Nothing screams 'bear market in conviction' more than MMFs seeing $1tn of inflows YTD… cash goes to bonds in hard landing, stocks & credit in soft landing, stays in cash & goes to commodities in no landing,” they wrote in a note.
In terms of regional breakdown, U.S. stocks witnessed their largest weekly inflow since March 2022, with $26.4 billion. Emerging markets (EMs) had a second consecutive week of outflows at $1.2 billion. Japan had an inflow of $200 million, while Europe experienced its 27th consecutive week of outflows, totaling $1.4 billion.
Within the U.S., large-cap stocks received an inflow of $18.7 billion, with the technology sector attracting $1.3 billion.