Equity funds posted their highest earnings in five weeks as investors raised bets that concerns about high inflation could be excessive and that central banks will therefore remain on track to moderately tighten monetary policy, a BofA report indicated.
In the week through Wednesday, investors invested $ 24.5 billion in stocks and $ 5.7 billion in bonds, while withdrawing meager funds from gold and $ 4.2 billion from cash portfolios, respectively, said BofA, which calculates the figures. from EPFR data.
The broadest investment flows went to sectors that would be best protected against any unexpected increases in interest rates, such as financials, bank loans and US inflation-protected securities. Inflows to credit funds stagnated.
“Investors do not fear the Fed or other central banks and do not believe that these entities will turn to aggressive monetary policy“Analysts led by Michael Hartnett, the bank’s chief investment strategist, said in the note.
Analysts BofA They noted that the UK base rate, which stands at 0.1%, is currently the lowest in 300 years. Some investors believe that a 15 basis point Bank of England interest rate hike expected by markets this year would represent a “policy error ”.
Analysts also noted that Turkey’s drastic 200 basis point rate cut on Thursday was the 1,000th such move by a central bank since Lehman Brothers’ bankruptcy in 2008.
The Bull & Bear indicator of BofA it climbed a notch to 5.2, in the middle of the range, but remained well below a high of 7.2 seen in January 2020.
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