Investors are moving into cash at the fastest rate since the start of the pandemic as stock markets around the world remain volatile, according to a new report from Bank of America (BAC).
Cash funds saw inflows of $68.1 billion U.S. over the past week, according to data from Bank of America Global Research.
That represents the largest influx into cash since a $126.4 billion U.S. inflow seen in the week of April 24 2020, which was one month into the COVID-19 pandemic.
Global stocks fell to a two-month low while bond yields surged over the past week as investors digested data that showed the U.S. economy remains strong, news that is likely to lead to higher interest rates for a longer period of time.
As a result, investors are selling out of stocks and moving to cash positions. Investors are also favouring cash over gold and other safe haven assets.
Bank of America said that sticky inflation and higher interest rates will make cash “as good as bonds and stocks” until the current bear market comes to an end.
Bonds saw inflows of $8.4 billion U.S. over the last week, while global stocks recorded outflows of $7.4 billion U.S. and investors pulled $900 million U.S. out of gold funds.
Bank of America added that its “bull and bear indicator,” which measures market sentiment, rose to 4.3 from 4.2 in the past week.
Bank of America’s stock is down 21% over the last 12 months at $33.49 U.S. per share.
