Investors buy US stocks at fastest pace in three months, BofA says

Investors have been actively purchasing US stocks at the fastest rate in three months, according to a Bank of America report. In the week leading up to September 18, investors put a net $79.3 billion into stocks, with $63.8 billion going towards US stocks alone. Meanwhile, they reduced holdings in investment-grade bonds by $1 billion and in high-yield bonds by $2.5 billion.

The bank's "Flow Show," utilizing EPFR data, suggests that the "three Ps" - positioning, policy, and profits - are all peaking. The bank acknowledges that the current bullish positioning in the market may be reaching its limit, profits are expected to peak next year, and monetary policy by the Federal Reserve is starting to tighten up.

The bank identifies three key risks for the fourth quarter: commodities, credit, and Chinese bonds. The price of key commodities, particularly oil, has surged by 47% in 2026 due to ever-tightening supply, particularly in diesel, which could lead to higher inflation. Additionally, high-yield credit spreads are at near-record lows, and a sudden re-pricing of credit risk could signal that the Fed may be overestimating GDP growth.

The bank also warns of a potential "China Shock 2.0" in Europe, indicated by a record German trade deficit and falling industrial production. China remains the only major economy with falling bond yields in 2026.