BofA's Hartnett sees risk-off mood lasting until dollar peaks

Investing.com -- Bond-market moves drove fund flows last week, with investors beginning to return to fixed income and bond-sensitive sectors, Bank of America's strategist Michael Hartnett said.

Hartnett continue to see a risk-off environment until the U.S. dollar peaks. They noted that tighter financial conditions are weighing on equity breadth, with 400 S&P 500 stocks trading below their 50-day moving averages and 300 below their 200-day averages.

"Market [is] trading “long artificial intelligence” (NDX), “short artificial irrelevance” (SPW)," Hartnett wrote in a note on Friday.

Bond funds attracted $18.8 billion in the week through Sept. 30, while equities drew $15.8 billion, crypto $900 million and gold $700 million, according to BofA, citing EPFR Global data. Money-market funds saw $118 billion in outflows, largely reflecting quarter-end flows.

Long-term bond funds, covering government and corporate debt with maturities of more than six years, recorded their biggest inflow since May 2025 at $7.4 billion. Municipal bonds also posted a record weekly inflow of $4.2 billion.

Among equities, China saw its largest inflow in nine weeks at $3.7 billion, while technology attracted $3.3 billion, its biggest inflow in five weeks. Utilities recorded their strongest inflow since December at $1 billion.

Regional flows showed U.S. equities posting their second straight week of outflows at $2.7 billion. Europe attracted $1.3 billion, its biggest inflow since February, while Japan saw a sixth consecutive week of inflows at $1.8 billion. Emerging-market equity inflows resumed at $3.2 billion.

Original Article

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