BofA Says Money Is King as Investor Pessimism Hits 2008-Period Excessive

(Bloomberg) — Buyers are flocking to money and shunning nearly each different asset class as they flip probably the most pessimistic for the reason that world monetary disaster, in response to Financial institution of America Corp. strategists.

Money had inflows of $30.3 billion, whereas world fairness funds noticed outflows of $7.8 billion within the week via Sept. 21, the financial institution mentioned in a word, citing EPFR World information. Bond funds misplaced $6.9 billion, whereas $400 million left gold, the info confirmed.

Investor sentiment is “unquestionably” the worst it’s been for the reason that disaster of 2008, with losses in authorities bonds being the best since 1920, strategists led by Michael Hartnett wrote within the word. They see money, commodities and volatility persevering with to outperform bonds and shares, with Financial institution of America’s customized bull and bear indicator returning to the utmost stage of bearishness.

Fears over inflation and rising charges deepened this week on indicators that the Federal Reserve gained’t soften its resolve to tighten financial coverage even when aggressive price hikes tip the economic system right into a recession. World threat property had been roiled once more, with the S&P 500 Index on track for its fifth weekly decline in six and practically erasing positive factors remodeled the summer time following a stronger-than-expected earnings season.

Hartnett expects US shares to fall additional as valuations come beneath strain from tightening monetary situations, rising geopolitical dangers and the dimming outlook for world development.

His forecast for company earnings suggests the S&P 500 will commerce between 3,300 and three,500 factors — a minimum of 7% beneath present ranges. Goldman Sachs Group Inc. strategists slashed their year-end goal for the US benchmark index late on Thursday, additionally warning {that a} dramatic upward shift within the outlook for rates of interest will weigh on valuations.

In Europe, fairness funds posted outflows for a thirty second straight week, in response to BofA’s word. By buying and selling type, US giant caps had inflows, whereas worth, development and small caps all noticed outflows.

Amongst sectors, actual property had the largest additions at $400 million, whereas financials and shopper shares noticed the most important redemptions.

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