Investors pour record money into equities even as bond yields rise: BofA

LONDON: Traders put a file $68.Three billion into fairness funds within the week to March 17, whilst a spike in authorities bond yields despatched the high-flying Nasdaq index reeling, BofA information confirmed on Friday.

US fairness funds sucked in $53 billion as ultra-easy financial coverage continued to spice up threat urge for food.

BofA warned of tightening international monetary circumstances, nonetheless, with eight rate of interest hikes internationally to date this yr versus 5 cuts.

In the meantime, the US Federal Reserve pledged to look previous inflation and preserve rates of interest close to 0% till at the least 2024. Nonetheless, the yields on 10-year notes spiked on Thursday to 1.75%.

That transfer sparked a large sell-off on Wall Road with the tech-heavy Nasdaq 100 slumping 3.1%, wiping off greater than $400 billion from firm valuations in a single session.

BofA stated the “uber-dovish Fed backfired” with bond vigilantes transferring shortly to attempt to bully the central financial institution into yield curve management – pinning down yields on bonds of a specific maturity.

World fairness funds have attracted $347 billion to date this yr, matching file inflows seen for 2017 as an entire. On an annualised foundation, this yr’s inflows are a “breathtaking” $1.6 trillion, BofA stated.

“We’re in (the) midst of (the) strongest macro information of our lives,” BofA funding strategist Michael Hartnett wrote in a observe to purchasers.

However some cracks have began to seem. He stated the Spring vaccine scarcity in Europe and rising markets means any disorderly bond yield rise could possibly be damaging for second quarter financial development.

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