Global investors plowed money back into stocks and bonds this week as they regained their appetite for risk, boosted by dovish comments from Federal Reserve Chairman Jerome Powell.
Equity funds drew inflows of $6.2 billion, their biggest in 11 weeks, Bank of America Merrill Lynch strategists said on Friday, citing data from EPFR on flows in the week to Jan. 9.
Some $7.2 billion flowed into bond funds, the biggest taking in 39 weeks.
BAML’s “Bull/Bear” gauge of investor positioning fell to 1.8 last week, what the strategists called “extreme bear territory”, triggering a “buy” signal for equities.
“Initial skepticism on size and duration of rally... quickly morphed into chase via stocks in EM and U.S. but not Europe,” BAML strategists wrote, commenting on feedback from clients after the signal.