Cash continued to dominate inflows last week, seeing significant allocations across all major asset classes, Bank of America revealed today's report. Cash inflows over the past three weeks reached a cumulative $145.3 billion, the largest since January.
During the week ending Aug. 21, money market funds drew $37 billion in inflows, equity funds attracted $20.4 billion, while bond funds saw $15.1 billion.
At the same time, gold had its largest inflow in four weeks at $1.1 billion, and cryptocurrencies captured $200 million.
U.S. equities witnessed their biggest inflow in five weeks, totaling $12.6 billion while emerging market equities saw their 12th consecutive week of inflows, the longest streak since February, with $4.7 billion.
The technology sector, despite an eighth consecutive week of positive flows, recorded the smallest inflow during this period at $0.5 billion.
BofA said its private clients, holding $3.7 trillion in assets under management, currently allocate 62.1% to stocks, 20.0% to bonds, and 11.1% to cash, following the largest weekly move into cash over the past three months.
Strategists led by Michael Hartnett said rate cuts are “not a likely spark for equity buying” from the $6.2 trillion in money market assets and $2.5 trillion in private equity cash. They point out that historically, the first Federal Reserve rate cut has preceded “more cash inflows in a “soft” landing” scenario, while bonds typically emerge as the winners in case of a hard landing.
BofA also highlights that “5 of 6 Powell Jackson Hole speeches saw the S&P 500 drop 7.5% on average in the next 3 months.”
Looking further ahead, the bank sees inflation as a growing risk for 2025, driven by factors such as geopolitics, strikes, protectionism, and the influence of AI and renewables on higher CPI.
Regionally, Japan saw a resumption of outflows last week, losing $500 million, while Europe recorded its second consecutive week of inflows at $400 million.
By style, U.S. large-cap stocks received $10.2 billion in inflows, and U.S. small caps garnered $2.1 billion, whereas value stocks experienced a $1.6 billion outflow.
In fixed income, investment-grade bonds marked their 43rd week of inflows at $8.1 billion, high-yield bonds had their second consecutive week of inflows at $2.4 billion, bank loans recorded their fourth consecutive week of outflows at $500 million, Treasuries saw their 16th week of inflows at $4.7 billion, and emerging market debt had its fourth week of outflows at $300 million.