BofA expects ‘another bout of risk-off to return late June’

Bank of America strategists remind the bank’s clients that there are still no signs of pause/pivot in , , , and core inflation.

They also highlighted the fact that the market expectations for the to hike in June are on the up despite positive news surrounding the debt ceiling talks.

“Once spreads in creaking global HY bonds back above >550bps, we expect another bout of risk-off to return late June,” strategists said in a client note.

As far as weekly flows are concerned, they highlight that $23.1 billion went to cash and $9.5B to bonds in the week to Wednesday.

Year-to-date (YTD) flows to cash now stand at $756B, approaching the $917B seen in 2020.

Stocks attracted the third consecutive week of outflows while bonds saw the 9th straight week of inflows. Tech witnessed inflows again as the AI frenzy continues to dominate market headlines.