Cash inflows surged with the biggest five-week cumulative influx since December 2023, totaling $231 billion, Bank of America strategists revealed in a new weekly report.
Money market funds registered $60.8 billion of inflows for the week ending September 4, and $231 billion over the past five weeks.
Meanwhile, stock fund inflows totaled $3 billion, while U.S. equities experienced their first outflow since June, though it was modest at $20 million.
Bond funds attracted $9.5 billion in inflows, and gold saw $600 million of inflows, while cryptocurrencies faced $600 million in outflows—the second-largest weekly outflow on record.
Private clients of BofA, holding $3.7 trillion in assets under management (AUM) currently hold 62.4% in stocks and 19.9% in bonds.
The report also discusses the upcoming jobs report on Friday, suggesting that a payroll increase below 100,000 in August and a rise in unemployment above 4.4% could trigger a “hard-landing” scenario.
This could lead to market adjustments such as a 50 basis-point Fed rate cut, pushing the toward 3% and oil prices down to $60 per barrel.
On the other hand, a “perfect” jobs report with payrolls increasing between 150,000 and 175,000 would favor a “soft-landing” scenario. In that case, tech and energy could “lead a reversal of recent big defensive outperformance,” strategists noted.
While the current outlook is not “all doom and gloom,” BofA pointed out that data on the yield curve steepening, weak labor trends, and manufacturing PMI under 50 continue to challenge the soft-landing trade.
Strategists recommend waiting for better entry points into risk assets and advise selling into the first Fed rate cut.
In other flows, Japan equities saw their first inflow in three weeks, with $300 million added, while European stocks experienced outflows for the second consecutive week, losing $600 million.
Within U.S. equities, large-cap stocks attracted inflows, while small-caps and growth stocks saw outflows.
In the fixed-income space, investment-grade bonds marked their 45th week of inflows, totaling $9.7 billion, while high-yield bonds recorded their fourth week of inflows at $900 million. Emerging market debt, however, continued to struggle with its sixth consecutive week of outflows, losing $300 million.
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