Global equity ETFs have seen record inflows of $152 billion over the past three weeks, according to Bank of America data.
For the week ending October 1, equity ETFs alone absorbed $30.4 billion, while overall equity funds saw net inflows of $26 billion, partially offset by $4.5 billion withdrawn from mutual funds. Technology led sector inflows, pulling in $9.3 billion—the largest weekly inflow on record—followed by Materials at $5.9 billion and Financials at $3.3 billion.
Bond funds attracted $19.9 billion during the week, although U.S. Treasuries experienced $7.5 billion in outflows, marking the sixth-largest withdrawal on record. Emerging-market debt drew $3.7 billion, investment-grade bonds $15.2 billion, and high-yield bonds $2 billion. Other notable inflows included $20.8 billion into cash, $5.9 billion into gold, and $2.9 billion into cryptocurrencies.
Against this backdrop, BofA strategists led by Michael Hartnett remain positioned for lower Treasury yields. “We are long zero-coupon bonds,” they wrote, explaining that anticipated Fed rate cuts and U.S. Treasury financing needs should keep yields pressured downward.
At the same time, the team flagged stress points in sectors such as oil, homebuilders, and chemicals as early signs of strain in the economy. On equities, they are focusing on resources and U.K. stocks to play the AI bubble. “Bubbles = booms = best played via barbell of bubble (AI) and cheap cyclical assets,” they said, adding that “price action, valuation, concentration, speculation all [appear] frothy.”
Hartnett also noted that lead indicators of inflation are trending higher, but emphasized that “every bubble in history popped by central bank tightening, and no central bank in the world has hiked rates in past 2 months.”
Additionally, the team sees Chinese banks as a “catch-up trade,” highlighting that rising Chinese bond yields are reversing a long-term secular decline. They compared this move to past rallies in Japanese and European banks, which surged as yields moved higher.
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