Investors shift to safer assets, inflow into money market and treasuries, outflow from gold.

From Investing.com: 2025-01-10 04:31:34

Investors are shifting to safer assets, with money market funds receiving $143.2 billion in inflows, the largest since April 2020. Treasuries and defensive assets also saw significant interest. Stock funds attracted $25.6 billion, bonds $21.6 billion, while crypto received $1.4 billion and gold lost $500 million in outflows.

Treasuries had their biggest inflow since August 2024, with $6.2 billion. Bank loans attracted a record $3.1 billion as investors anticipated Federal Reserve rate hikes. Emerging market equities received $3.5 billion in inflows, while the tech sector saw its first inflow in six weeks, drawing $2.3 billion.

Strategists predict a hawkish stance from the Federal Reserve due to elevated bond yields. They anticipate a shift to long positions in bonds with 5% yields, international equities in China, the UK, and emerging markets, and gold. The playbook includes a focus on policy changes in Asia & Europe, Chinese consumer activity, Trump’s potential shift from tariffs to tax reforms, and geopolitical developments.

US equities attracted $11.2 billion in inflows for a second consecutive week, while emerging markets received $3.5 billion. Japan experienced outflows of $800 million for a second week, and Europe saw outflows for the 15th consecutive week, shedding $100 million. Investment-grade bonds extended their streak with $10.1 billion in inflows, high-yield bonds saw $600 million, bank loans attracted $3.1 billion, and Treasuries gained $6.2 billion for the third week.



Read more at Investing.com: High yields, dollar strength to prompt Fed hawkishness, weigh on stocks: BofA By Investing.com