LONDON (Reuters) – Investors pumped money into bonds and equities in the week to Wednesday with U.S. stock funds adding $1.7 billion, Bank of America Merrill Lynch said on Friday, as markets tried to weigh hopes for major central bank stimulus against economic woes.
Bond funds raked in $9.6 billion in their 27th week of inflows, with investment grade vehicles adding $4.1 billion while high-yield and emerging markets added $2.3 billion and $1.3 billion respectively, BAML citing EPFR data.
Equity funds added small overall inflows of $600 million in the week to Wednesday, with $5.3 billion of ETF inflows more than offsetting $4.6 billion of outflows from mutual funds.
Geographically, U.S. equity funds added $1.7 billion though Japanese stocks vehicles suffered their first outflow in seven weeks, losing $500 million. European equity funds lost $2.9 billion while investors pulled $1.6 billion from emerging markets in a 12th straight week of outflows.
The flows had been measured ahead of this week’s testimony by U.S. Federal Reserve chair Jerome Powell, where he cemented expectations for an interest rate cut in coming weeks.
In the wake of the testimony, flows showed investors were selling equities and buying investment grade, high-yield and government bonds, BAML noted.
BAML’s Bull & Bear Indicator stood at 3.1, in “neutral” territory, the bank added.
Reporting by Karin Strohecker; Editing by Ritvik Carvalho