Stock inflows accelerating, keep an eye on capitulation

Inflows in equities accelerated in the past 7 weeks, according to analysts at Bank of America.

They note that equities attracted nearly $70 billion in the past 7 weeks.

“Not yet ‘capitulation’ back-in but keep an eye on this,” the analysts said in a client note.

In the week to Wednesday, July 12, stocks and bonds attracted $11.6B and $12.1B in inflows, respectively. On the other hand, $17.6B in cash was withdrawn from money markets.

BofA analysts also noted that “fast money” is bullish on equities while “slow money” is bearish. Tech saw the largest inflow in 4 weeks ($2B) as investors continue to “chase the rally.”

On the other hand, healthcare witnessed the largest outflow in 5 months ($1.1B) as the tech rally takes place at the expense of defensives.

Region-wise, the U.S. saw the 2nd week of inflows at $9.9B, while Europe had the 18th week of outflows at $3B.

“We say ’23 disinflation to prove ‘transitory,’ real rates to rise & no <3% US yields without very ‘hard landing’,” the analysts concluded.