Bank of America: Cash funds were favored for the strongest start to the year ever

(1) Investors saw $39.7 billion in inflows into cash funds in the week ended Jan. 10, bringing inflows into cash funds to $163 billion in the first two weeks of the year, the strongest start to the year ever, the Bank of America Global Research said on Friday, citing EPFR data. (2) This is similar to last year’s situation. As Intrerest Raterise attracted demand and drop investors’ appetite for riskier assets, cash fund inflows reached a record $1.3 trillion last year. (3) Bank of America reported that bond funds also saw massive inflows of $13.9 billion during the week, the largest weekly inflow since April 2023. Equity funds saw an outflow of $7.1 billion. (4) Both U.S. and Japanese equity funds saw outflows for the first time in three weeks, with the latter coinciding with the Nikkei 225 index. The N225 is close to its 34-year high. (5) Technology funds saw inflows of $2.3 billion, the largest weekly inflow in the past 19 weeks. (6) BofA’s CBR gauge, a measure of market confidence, rose to 5.4 from 5.3, the highest since November 2021. (7) However, BofA said that for the indicator to see an “extremely bullish” signal, then in the next fund manager survey, cash levels must fall, equity inflows must exceed $8 billion per week, and emerging market bond funds must show inflows