Investing.com -- Money market funds recorded the largest outflows since April 2024, with $83.5 billion withdrawn in the week to January 15, Bank of America revealed in its latest report.
During the week, stocks saw inflows of $13 billion, while bonds attracted $11.4 billion. Gold also gained momentum with $1.3 billion in inflows, while cryptocurrencies faced a $900 million outflow.
BofA strategists led by Michael Hartnett said commodities have been the best-performing asset since the Federal Reserve’s 50 basis point (bp) rate cut in September.
He advises investors to stay long commodities amid rising global PMIs, increasing Chinese money supply, and the peak in the US dollar. However, he suggests flipping from oil to gold “as Russia/Ukraine/Middle East geopolitics flip from war to peace.”
For stocks, Hartnett believes the downside is protected by Trump’s policies, but warns that the upside may be “constrained by concentration, valuation, positioning.”
The strategist is bullish on rate-sensitive sectors like homebuilders (XHB), utilities (XLU), financials (XLF), and REITs. In addition, BofA is long international equities in 2025, especially Europe, China, and emerging markets (EMs), citing “policy easing, cheap currencies & valuation,” as well as easing geopolitical risks.
Regionally, US equities posted a third consecutive week of inflows at $11.6 billion through Jan.15, while Japanese stocks experienced their largest inflow in 11 weeks at $1.1 billion.
EMs saw $2.2 billion in outflows, and Europe marked its 16th straight week of redemptions, losing $700 million.
In fixed income, investment-grade bonds extended their streak with $5.5 billion in inflows over 64 weeks. US Treasuries gained $3.5 billion, marking a fourth week of inflows. However, high-yield bonds saw outflows of $100 million, and emerging market debt lost $300 million for the second consecutive week.
Bank loans remained a strong performer, adding $2.1 billion in their 15th consecutive week of inflows.