Investing.com -- Bond and money-market funds drove most of the inflows last week, with crypto funds experiencing their largest inflow since March, according to Bank of America’s latest weekly report.
Meanwhile, equities saw their first outflow in seven weeks and the largest since April.
Per the report, bond funds attracted $18 billion in inflows during the week through Oct. 23, while cash pulled in $9.6 billion. Crypto drew $3 billion as digital assets regained some momentum, while stock funds saw a $1.4 billion exit.
BofA strategists spearheaded by Michael Hartnett said of all of the contrarian post-election trades, such as “sell Trump rip,” “buy Harris dip,” or “Trump wins, China rallies,” the most contrarian is “buy bonds.”
This is because the next administration will strive “to reduce US budget deficit in '25, acknowledging [that] an electorate [is] unhappy with cost of living. Hartnett and his team believe this would be the “most bullish midterm outcome for stocks.”
Regionally, the U.S. equities market continued to benefit from inflows last week, marking the fourth consecutive week with $6.1 billion added.
Japan saw a resurgence of interest with a $3.2 billion inflow, its largest since August.
Elsewhere, sentiment remained negative in Europe and emerging markets; Europe faced its fifth straight week of outflows, shedding $2.4 billion, while emerging market equities, driven by China’s $3.9 billion outflow, marked a third consecutive week of losses.
In fixed income, investment-grade bonds extended their streak to 53 consecutive weeks of inflows, pulling in $11.2 billion.
High-yield bonds followed with $1.2 billion in their 12th week of gains, while Treasury and municipal bonds continued to attract investors, gathering $3.5 billion and $2 billion, respectively. Conversely, emerging market debt saw its biggest outflow since March, losing $2 billion.
Meanwhile, gold registered the largest 4-week inflow since March 2022 at $5.5 billion.