Corporate bond funds see biggest inflows since January, Bank of America says

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In a week when analysts at the BlackRock Investment Institute offered investment-grade credit, Bank of America said bond funds — including investment-grade, high-yield and emerging markets — had their biggest hits. sustained inflows since January as bond investors put the money back to work.

In its weekly “flow show” report, Bank of America said inflows were notable this week in stocks, bonds and some commodity funds. Still, in the past two weeks, investment grade credit funds saw inflows of $7 billion, which is the best time since the start of this year.

See: BlackRock warns investors they should buy defensive stocks and bonds as tech-driven rally risks running out of steam

On the government bond side, nominal treasury bond funds have seen steady inflows for months now, but inflation-protected government bonds have seen a five-week period of outflows.

Source: Bank of America


A review of individual equity sectors showed that resource and materials funds saw some of the largest outflows since January 2019.

More generally, US equities saw sustained inflows throughout the year, even when prices fell earlier this year. Still, stocks posted their largest inflows in eight weeks last week.

Investors were particularly interested in financials and technology stocks, with technology seeing the largest inflows in eight weeks and financials seeing inflows in the past two weeks.

Source: Bank of America


Finally, Bank of America’s weekly “bullish and bearish indicator” showed that the backdrop remained supportive for equity buyers, with sentiment remaining mired in “maximum bearish” territory for a ninth consecutive week.

Source: Bank of America


Typically, when the gauge is at its maximum in bearish territory, stocks experience positive returns over the next year.

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