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Dash to cash and bonds as the position indicator is extremely bearish-BoFA

London (Reuters) – BoFA Securities said in a weekly note on Friday that investors looked for safety in cash and U.S. Treasuries while selling gold and stocks as the markets got ready for a bumpy ride because central banks quickly raised interest rates in response to slowing economic growth.

Investors placed $62.6 billion in cash and $2.4 billion in bonds, according to EPFR data cited by BoFA. The week ending July 6 saw the largest influx of U.S. Treasuries in eight weeks, while the largest outflow occurred in developing market shares.

Michael Hartnett, who led a team of analysts at BofA, stated, “The plain fact remains that the second half will likely be characterised by slowing growth and rising rates.”

“Bear markets terminate with a recession or an event that forces the Federal Reserve to reverse policy.” “The bear markets are not done, and the Big Low has not yet been achieved.”

A market index that measures investor positioning remained “very pessimistic” for the fourth consecutive week. For the past 21 weeks, money has been taken out of European stock funds, while money has been taken out of emerging market debt funds for the past 13 weeks.

A U.S. Treasury bond market volatility indicator remained above 150 for only the eleventh time in the past 35 years, a level that corresponds with recessions or defaults.

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