While recording their tenth consecutive week of inflows, high grade bond funds reported their lowest level of inflows in seven weeks. But, the bank said it is of the view that this is merely indicative of the market taking a breather.
“Inflows will continue and strengthen for an asset class the ECB has not even started buying yet”, it said.
But, it added, it was also worth noting that high-grade bonds and commodities were the only two asset classes recorded inflows last week as investors continued to retreat from “assets that now are yield deeply negative (govies) or have dubious outlooks on the back of lowflation concerns (equities)”.
BAML also pointed out that while high grade funds had seen $12bn in inflows since early March, high yield funds are only up by $1bn.
Looking at duration, it seems that investors flocked into the belly of the curve, BAML said, while short-term and long-term IG funds recorded outflows last week.