BofA’s Hartnett Sees Risk-Off Mood Lasting Until Dollar Peaks
Investors are set to shun riskier trades until the dollar’s recent surge shows signs of peaking, according to Bank of America Corp.’s Michael Hartnett.
Bank of America strategist Michael Hartnett has observed a growing risk-averse sentiment in the market, anticipating that this trend will persist until the U.S. dollar reaches its highest point. He believes that tighter financial conditions are currently affecting equity breadth, with a significant number of S&P 500 stocks trading below their 50-day and 200-day moving averages. Hartnett's observations were detailed in a note he published on Friday.
During the week, bond funds attracted a substantial $18.8 billion, while equities drew in $15.8 billion. Crypto assets received $900 million, and gold saw inflows of $700 million. Money-market funds, on the other hand, experienced $118 billion in outflows, likely due to quarter-end flows.
Long-term bond funds, which cover government and corporate debt with maturities exceeding six years, recorded their biggest weekly inflow since May 2025 at $7.4 billion. Municipal bonds also saw a record weekly inflow of $4.2 billion. In the equities market, China experienced its largest inflow in nine weeks at $3.7 billion, while technology attracted $3.3 billion, marking its biggest inflow in five weeks. Utilities posted their strongest inflow since December at $1 billion.
Looking at regional flows, U.S. equities saw their second consecutive week of outflows at $2.7 billion. Europe attracted $1.3 billion, marking its biggest inflow since February, while Japan observed a sixth consecutive week of inflows at $1.8 billion. There was a resurgence in emerging-market equity inflows at $3.2 billion.
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