Investors ploughed $123.1 billion into cash in the seven days to Wednesday, marking the largest such inflow since March 2023 and a record for the first week of a year, Bank of America said in a report published on Friday.
The shift, which BofA said was typical for the first week of the year, follows 2023's record yearly inflow to cash of $1.3 trillion, as risk-averse investors fled to safe-haven assets and higher interest rates reduced investor demand for stocks.
Citing data from fund flows and asset allocation data provider EPFR, BofA said investors bought $10.6 billion of bonds and $7.6 billion of stocks, but they shed $0.8 billion of gold.
It was the second week in a row for inflows to equities, and eight out of the past ten weeks have seen inflows, totalling $82 billion, BofA added.
Global equities are set to snap a nine-week winning streak as bets on aggressive central bank rate cuts were rolled back.
The benchmark S&P 500 is up about 14% since the end of October, but declined 1.1% over Wednesday and Thursday, as investors grew nervous about expectations of near imminent interest rate cuts from the Federal Reserve.
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"Fed and yields dictating credit and stocks," BofA said.
Energy stocks saw their seventh straight week of outflows, and the largest since July 2023 of $1.0 billion. U.S. small-cap stocks recorded a weekly inflow of $2.3 billion, their fifth weekly inflow in a row.
BofA's bull & bear indicator, a measure of market sentiment, rose to 5.3 from 5.0 to the highest level since November 2021 though remained at a neutral signal, with BofA citing equity breadth, credit technicals and strong high yield inflows.