Equity conviction is returning but tech not seeing love, claims BofA

In BofA's "The Flow Show" note, analyst Michael Hartnett told investors that the conviction in bonds continues.

The analyst explained in his "flows to know" section that there was $7.3 billion into investment grade bonds, while there is "no inflation fear" with a 23rd straight week of TIPS outflows ($1.6 billion).

Meanwhile, he stated that there is conviction in emerging markets, with the seventh straight week of emerging market equity and debt inflows ($8.3bn).

"Equity conviction returning," states Hartnett, with $44.7 billion into stocks in the past four weeks, with "evidence of return to US stocks ($6.7bn inflow this week)."

However, the analyst notes that tech is not yet seeing love via flows, as it experienced the 10th consecutive week of tech outflows, although it was the smallest in 10 weeks.

Furthermore, the shift to a more positive risk sentiment is noted in BofA's Bull & Bear indicator, which has risen to 4.2 from 3.5, the highest since Mar 2022 and the biggest three-month surge since August 2020, "driven by strong EM inflow, strong stock market breadth."

By Sam Boughedda

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