Weekly Inflow to Cash of $88.8 Billion Was Highest Since Pandemic - BofA

October 7, 2022 7:52 AM EDT
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In the week to Wednesday, investors fled to cash at the highest level witnessed since April 2020, the Bank of America’s data shows. Inflows to cash were as much as $88.8 billion.

Outflows from bonds were $18.2 billion - the biggest in 4 months - and $3.3 billion from stocks. Europe saw the 34th consecutive week of outflows, which is the longest streak since 2016.

The firm’s Chief Investment Strategist, Michael Hartnett, noted that the week to Wednesday was the 15th consecutive week of outflows from hold, which marks the longest streak since January 2014.

Hartnett adds that it is “so tempting to be contrarian bull” as bonds have crashed and stocks trade at attractive valuations.

“Only question for investors is hard landing or soft landing in 2023; we say hard landing,” he added.

A hard landing will result in “ultimate highs in credit spreads,” while lows in stocks are “yet to be seen.” The strategist also sees risk assets printing new lows in October.

“Lots of wood still to chop in credit, tech sector, private equity,” Hartnett added.

In the meantime, Bank of America’s Bull & Bear Indicator remains at 0.0, signaling “max bearishness for 3rd week in a row on bond outflows.”

By Senad Karaahmewtovic

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