Cash Inflows Surge

Cash inflows surged with the biggest five-week cumulative influx since December 2023, totaling $231 billion, as revealed by Bank of America strategists in a new weekly report.

Money Market Funds

• Money market funds registered $60.8 billion of inflows for the week ending September 4.
• Over the past five weeks, the inflow totaled $231 billion.

Stock and Bond Funds

• Stock fund inflows totaled $3 billion.
• U.S. equities experienced their first outflow since June, though modest at $20 million.
• Bond funds attracted $9.5 billion in inflows.
• Gold recorded $600 million of inflows.
• Cryptocurrencies faced $600 million in outflows—the second-largest weekly outflow on record.

Asset Management

Private clients of BofA, holding $3.7 trillion in assets under management (AUM), currently hold:
– 62.4% in stocks
– 19.9% in bonds

Jobs Report Outlook

The report discussed the upcoming jobs report on Friday. A payroll increase below 100,000 in August and a rise in unemployment above 4.4% could signal a ‘hard-landing’ scenario, potentially resulting in:
– 50 basis-point Fed rate cut
– 10-year Treasury yield approaching 3%
– Oil prices dropping to $60 per barrel.

Conversely, a ‘perfect’ jobs report (payrolls increasing between 150,000 and 175,000) could favor a ‘soft-landing’ scenario, leading to a turnaround in tech and energy after defensive outperformance.

BofA noted areas of concern:
– Yield curve steepening
– Weak labor trends
– Manufacturing PMI under 50

Strategists recommend waiting for better entry points into risk assets and advise selling into the first Fed rate cut.

Other Market Flows

• Japan equities saw their first inflow in three weeks, adding $300 million.
• European stocks experienced outflows for the second consecutive week, losing $600 million.
• In U.S. equities, large-cap stocks attracted inflows, while small-caps and growth stocks saw outflows.

Fixed-Income Overview

In the fixed-income space:
– Investment-grade bonds marked their 45th week of inflows totaling $9.7 billion.
– High-yield bonds recorded their fourth week of inflows at $900 million.
– Emerging market debt faced its sixth consecutive week of outflows, losing $300 million.