The initial week of the year witnessed extraordinary cash inflows into money market funds, setting a record, according to BofA strategists.
In the week ending January 3, cash received $123.1 billion, bonds attracted $10.6 billion, and stocks saw $7.6 billion in inflows. Notably, gold experienced an outflow of $800 million during the same period.
BofA strategists highlighted the contrasting trends of a contracting ISM, resilient payrolls, strong stocks, and a slowdown in job openings.
They add that it is “critical Fed eases H1 to avert corporates cutting jobs and capex H2.”
Moreover, notable fund flows include 10 consecutive weeks of inflows into investment-grade bonds, the largest inflow since July 2023 at $8.0 billion, and eight out of the last 10 weeks witnessing inflows into equities, totaling $82 billion over the period.
Energy experienced its seventh consecutive week of outflows, marking the largest since July 2023 at $1.0 billion.
In the regional breakdown of equities, the US saw its second week of inflows at $3.9 billion, while emerging markets recorded their fifth consecutive week of inflows at $3.7 billion. Japan observed its second week of inflows at $80 million, and Europe resumed outflows at $900 million.