The Highest Weekly Outflow Since the Pandemic

According to data from Bank of America, in the week before Wednesday, investors converted to cash at the highest pace since April 2020. There were cash inflows of up to $88.8B.

Equity withdrawals of $3.3B and bond outflows of $18.2B, the most in four months, both happened. Europe continued to see outflows for the 34th consecutive week, continuing the longest streak since 2016.

Analysis of the Experts

The company’s Chief Investment Strategists report that the outflows from hold have been on pause for the longest period since January 2014. The analysts continued by stating that it is extremely tempting to be a contrarian bull, given how badly bonds have fallen and how well stocks are now performing. They continued to mention that the only decision for investors is whether to expect a harsh or gentle landing in 2023. In the event of a hard landing, credit spreads will reach their “ultimate highs.” Meanwhile, stock market lows are still not here. The experts predict that in October, risky assets will record new lows.

They noted that much more wood still has to be cut in the credit, IT, and private equity sectors. Bank of America’s Bull & Bear Indicator is still at 0.0, indicating max bearishness on bond outflows for the third week.

Europe saw the 34th consecutive week of outflows. That is the longest rate of constant outflow of cash in the European Union since 2016, before the breakout of COVID-19 and the consecutive recession imposed on the global economic markets.