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Both equities and cash attracted large inflows in the week to October 19, according to Bank of America (NYSE:BAC)’s strategists, citing EPFR Global data.
Inflows to cash were $14.5 billion while $9.2 billion went into equities. Outflows from gold and bonds were $1.5 billion and $12.2 billion, respectively.
The strategists say flows suggest that there is still no final capitulation in equity flows. Again, this is despite BofA Bull & Bear Indicator sitting at 0.0, indicating maximum bearishness.
“UST 2-year yield now 280bp higher than SPX dividend yield, widest since ’07 (Chart 4); investor flooding to short-duration bonds…equity risk is this continues via rotation from stocks; bull case is no new highs in US$ signals monetary policy shift from Quantitative Tightening to “Quantitative Tinkering”,” they wrote in a client note.
The strategists also noted a “disorderly drop” in bank deposits, which plunged $360 billion since April this year.
