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Investing.com -- Bond and crypto assets led investor allocations in the latest week, while cash saw its steepest withdrawal since April, according to Bank of America (BofA).
Citing EPFR Global data for the week ending July 16, BofA said bond funds took in $15.7 billion, crypto funds added $5.8 billion—their biggest weekly haul since November—while equities drew $4.8 billion.
Gold funds collected $1.3 billion, and money market funds posted a $26 billion outflow.
BofA’s team of strategists, led by Michael Hartnett, said that recent market behavior is showing signs of a "brewing bubble."
While valuations for the Magnificent 7 remain elevated, “the biggest tell would be stocks totally ignoring a rise in inflation expectations & bond yields to new highs," they added.
They highlighted stretched valuations and weak market breadth, with the equal-weight S&P 500, small caps, and value stocks significantly lagging.
All of this signals that "U.S. economy [is] slowing and/or U.S. equities [are] bubbling; in contrast, value stocks & small cap outperforming in global stock markets," the team continued.
The report pointed to a marked deterioration in foreign interest for U.S. assets. Over the past three months, foreign inflows into U.S. Treasuries fell to just $500 million, the weakest since February 2017.
U.S. equity inflows from international investors have dropped below $2 billion, down sharply from $34 billion in January. The U.S. share of global equity inflows also slipped—from 72% in 2024 to 48% so far this year.
Within sectors, healthcare funds saw their largest weekly outflow since June 2020 at $2.3 billion, while materials funds attracted a record $6.0 billion.
Regionally, U.S. equities posted a small $100 million outflow, while Japan saw $3.6 billion leave. Europe and emerging markets recorded modest inflows of $200 million each.
On the fixed income side, investment-grade and high-yield bonds posted their 12th consecutive weeks of inflows at $9.5 billion and $2.3 billion, respectively.
Treasuries attracted $1.9 billion and TIPS resumed inflows with $500 million. Bank loan funds extended their positive streak to five weeks.