20 Feb 2015
Fund Flows: Risk appetite recovering – BAML
FXStreet (Barcelona) - The BofA-Merrill Lynch, share the fund flow data in equities and bonds, noting that the flow sentiment suggests improving sentiment.
Key Quotes
“Risk appetite is recovering: $11bn of money market outflows and $13bn of equity & bond inflows”
“Europe is awesome: big $5.8bn inflows this week ($21bn in past 6 weeks ); dovetails with BofAML FMS showing 2nd highest asset allocation to Eurozone stocks on record”
“HY is awesome: 4th consecutive week of inflows to HY bond funds; note High Yield now best performing fixed income sector YTD & just 1.0% away from all-time highs”
“Safe is boring: outflows from recent "safe haven" winners…US stocks, Treasuries, precious metals, utility sector”
“YTD asset returns: stocks +3.1%, bonds -1.0%, commodities +1.4%, US dollar +4.4%; vol, gold & long duration bonds were the clear Jan "winners"; but risk assets have rallied big in Feb and quietly Treasury yields have jumped sharply (30-year up 50bps in Feb)”
“Sentiment & Policy key risk drivers: flows show sentiment is improving, but is still bearish according to BofAML's Bull & Bear Index; latest reading is 3.0, up from contrarian "buy" signal of 1.7 on 1/7/15); meanwhile policy makers (ECB QE & 14 rate cuts in 2015) have arrested the sharp H2'2014 decline in inflation expectations; the combo of investor fear & central bank benevolence has caused risk assets to rally in Feb.”
“Volatility is likely to return in March as Fed rate hike worries resurface.”
Key Quotes
“Risk appetite is recovering: $11bn of money market outflows and $13bn of equity & bond inflows”
“Europe is awesome: big $5.8bn inflows this week ($21bn in past 6 weeks ); dovetails with BofAML FMS showing 2nd highest asset allocation to Eurozone stocks on record”
“HY is awesome: 4th consecutive week of inflows to HY bond funds; note High Yield now best performing fixed income sector YTD & just 1.0% away from all-time highs”
“Safe is boring: outflows from recent "safe haven" winners…US stocks, Treasuries, precious metals, utility sector”
“YTD asset returns: stocks +3.1%, bonds -1.0%, commodities +1.4%, US dollar +4.4%; vol, gold & long duration bonds were the clear Jan "winners"; but risk assets have rallied big in Feb and quietly Treasury yields have jumped sharply (30-year up 50bps in Feb)”
“Sentiment & Policy key risk drivers: flows show sentiment is improving, but is still bearish according to BofAML's Bull & Bear Index; latest reading is 3.0, up from contrarian "buy" signal of 1.7 on 1/7/15); meanwhile policy makers (ECB QE & 14 rate cuts in 2015) have arrested the sharp H2'2014 decline in inflation expectations; the combo of investor fear & central bank benevolence has caused risk assets to rally in Feb.”
“Volatility is likely to return in March as Fed rate hike worries resurface.”