A new era of volatility begins, but equity inflows continue: BofA By Reuters

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© Reuters. FILE PHOTO: Dividers are seen inside a trading post on the trading floor as preparations are made for a return to trading on the New York Stock Exchange in New York.

By Thyagaraju Adinarayan LONDON (Reuters) – Investors invested billions of dollars in high-flying stocks even as the current bond market crash caused heavy losses on Wall Street and ushered in a “new era of volatility,” said BofA on Friday. About 1.6%, they have risen about 45 basis points in the last month, prompting a sell-off of shares, which have lost $ 4 trillion in market value since the peak in mid-February. The investment bank, which analyzed flows from EPFR data, said equity funds posted $ 22.2 billion inflows, driven by $ 2.3 billion in technology and $ 2 billion in finance. in the week until Wednesday. The bond market crash is still causing a major shift in investor positioning, with a record 62.6% of BofA clients invested in stocks. A $ 29 trillion fiscal and monetary stimulus has led to an “addictive” Wall Street-Fed culture of dependency, Michael Hartnett, the bank’s chief investment strategist, said in the note to clients. Markets are now likely to push the Fed through higher yields to a yield curve control (YCC) policy announcement, he added. Thursday’s message from US Federal Reserve Chairman Jerome Powell disappointed Wall Street, as investors had created expectations that it would act on the wildly spike in US Treasury yields. 10 years. The Fed’s policy-making committee meets on March 16-17. Global stocks have added close to $ 40 trillion since the bottom of the coronavirus selloff last year. Stocks have added about $ 6 billion an hour since last March, nearly 10 times faster than the pace seen in the immediate aftermath of the 2008 global financial crisis, according to BofA. “We think the Fed will inevitably move to YCC,” Hartnett said, adding that the US dollar could rise before then, but any announcement of a switch to YCC would likely trigger the start of a big bear market in dollars. On Friday it reached the November highs. Still, investors were largely bearish with net short positions of $ 30 billion, down slightly from the $ 35 billion at the end of January, which was the most since 2011. (Chart: Short bets on USD and USD: https: //fingfx.thomsonreuters. Com / gfx / mkt / yxmpjxanlpr / Short% 20USD% 20bets% 20and% 20USD.JPG)

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