Investors bought stocks and bonds, shed cash in past week, say BofA

BofA Global Research, citing EPFR data, reported $64.5 billion of stock-fund inflows and $11.8 billion of bond-fund inflows in the week to Wednesday, while money-market funds had $53.1 billion in outflows. Tech stocks drew $10.7 billion for the week and a record $196 billion year-to-date; Treasuries received $3.6 billion, extending their inflow streak to 16 weeks. Emerging markets attracted $17.7 billion, including $8.6 billion for China, while Brazil recorded $4.7 billion of inflows over two weeks amid its presidential runoff campaign; the Nasdaq fell 1.8% on Thursday as the 10-year Treasury yield dropped 10 basis points.

Analysis

The signal is less “risk-on” than a rapid rotation out of liquidity: simultaneous equity and bond buying can reflect volatility trades and portfolio re-risking, not a durable macro view. Weekly fund flows are noisy and lagged; record-to-date tech and U.S. equity allocations make incremental buyers less reliable as a cushion if earnings or rates disappoint. A crowded unwind could therefore amplify downside in high-duration growth, while a renewed Treasury rally would cushion diversified portfolios.

Over days, avoid chasing the bond rally or extrapolating one week of inflows. Over 1–3 months, the key test is whether inflation and labor data permit lower yields; persistent inflation or hawkish repricing would pressure long-duration equities and reverse Treasury gains. Over 6–18 months, sustained reallocation from cash matters only if earnings breadth and real returns validate it.

EM flows are especially event-sensitive: concentrated China and Brazil buying can reverse quickly. Brazil’s runoff adds a political volatility premium; do not treat recent inflows as evidence of durable policy or currency stability. The Tesla reference in the headline has no supporting company-specific information here, so it does not change the TSLA view.

Key Decisions for Investors

• Do not chase the weekly flow data. Keep core equity exposure, but hedge crowded growth risk selectively; consider Nasdaq put spreads only if implied volatility and carry are acceptable, with a 1–3 month horizon.
• Treat Treasury duration as a conditional hedge, not a standalone flow trade: add duration on a yield backup only if incoming inflation data and Treasury auctions do not undermine the disinflation case. Falsifier: renewed inflation acceleration or a sustained move back above the pre-rally yield range.
• Keep Brazil exposure tactical into the runoff; size below normal and define an exit around adverse polling, policy signals, or a sharp currency/local-rate deterioration. Recent inflows are not a sufficient entry thesis.
• Monitor tech earnings revisions and market breadth. If leadership stays narrow while yields rise, reduce high-duration exposure; if breadth improves alongside stable yields, the crowded-positioning risk is less acute.