Reuters citing BOFAML flow data
– Bond holdings up to 39.2%
– Investors cut equity allocations to 46%
The change around in flows has been put on the new year souring of risk trades and the threat of recession. I think that’s only part of the story. The Fed hike gets little in the way of news concerning the moves we’ve seen. A switch from stocks to bonds has often been a move when central banks have entered a hiking cycle but also the final nail in the easy money coffin that came with a hike has a lot to answer for. Probably the next big trigger for flows will come when the Fed starts to taper the reinvestment of QE and looks to start draining all the liquidity properly.