Investors' dash to cash may have peaked, Bank of America says
Business
More recently, excitement about AI has triggered a boom in tech stocks
LONDON (Reuters) – Investors' rush to the safety of cash, a dominant theme in capital flow data this year, may be peaking, Bank of America global research said on Friday.
There was a net $10 billion dollars of outflows from cash in the two weeks to Wednesday, BofA said, referencing EPFR data, describing this as "a tentative top after $642bn of inflows" since the US Silicon Valley Bank failed in mid-March.
That collapse jolted markets, and the rush for cash in the first half of this year was further reinforced by central banks continuing to hike interest rates, which reduced investor demand for stocks and made rates on cash-like money market funds more attractive.
More recently. however, excitement about AI has triggered a boom in tech stocks, while there are signs that inflation is easing on both sides of the Atlantic, most significantly in the United States, meaning the end of rate hikes is likely in sight.
The S&P 500 is trading around its highest in 15 months.
Tech stocks have seen strong inflows for the past eight weeks, BofA said, and high yield bonds saw their third weekly inflow in the week to Wednesday versus outflows from investment grade bonds.
The weekly data, however, showed $7.5bn of flows into cash, as well $1.4bn to bonds, $600 million from gold and $2.1bn from stocks.
Bank loans saw inflows of $400m, the most since May 2022, and Japanese equities saw their seventh week of inflows, its longest streak since January.
BofA's own "bull bear indicator" rose to its most bullish level in the year-to-date.
