LONDON (Reuters) – Buyers pumped cash into cash, funding grade bonds and gold, however pulled cash out of equities, BofA’s weekly fund stream statistics confirmed on Friday, signalling a transfer away from high-risk belongings. Cash managers have allotted $40.9 billion to cash, the most important influx since May 6, and $24.5 billion into bond funds, third largest influx ever, Bank of America mentioned. Buyers pumped $3.eight billion into gold, the second largest influx into the commodity ever. However there have been $3.eight billion in redemptions from equities. The funding bank famous two large themes rising within the monetary markets – an awesome repression in rates of interest and an awesome debasement of the U.S. greenback, which it mentioned ought to incite rotation from deflation to inflation. The bank mentioned $eight trillion of financial stimulus by way of central bank asset purchases in 2020 had crushed rates of interest, company bond spreads and volatility. Central banks’ bond-buying programmes throughout developed markets have pushed the ICE BofA MOVE index that tracks anticipated volatility within the U.S. Treasury market to 43, near a file low, after the index rose above 160, its highest degree in additional than a decade, 4 months in the past. .MOVE “Interest rate repression means investors can’t hedge the inflationary risks … crowding into ‘short U.S. dollar’, ‘long gold’ hedges,” the funding bank mentioned. Reporting by Olga Cotaga; Modifying by Elizabeth Howcroft and Jane MerrimanOur Requirements:The Thomson Reuters Belief Ideas.
