Investors funneled $19 billion into bond funds in the week leading up to Wednesday 3rd July 2024, marking the largest inflow since February 2021 as they sought to lock in high yields, according to a Bank of America (BofA) research note released today (5th July 2024). Cash funds also saw significant activity, with $51.9 billion in inflows, the largest in two months, based on data from EPFR, as reported by BofA.
The surge in yields on fixed income assets, driven by central banks raising interest rates to combat inflation, has attracted investors to bonds and money market funds. BofA analysts noted that investors are "locking in 'peak yields'" in anticipation of potential rate cuts later this year (something we also advised clients in the past year would happen).
Financial markets are expecting the US Federal Reserve to reduce borrowing costs by approximately 0.5 percentage points this year, following signs of progress on inflation and slowing economic growth. Equity fun ...
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