Investors have pulled $14.2 billion out of US equity funds over the past three weeks, according to Bank of America strategists. It’s the biggest withdrawal since January, and it didn’t happen in a vacuum.
The exodus coincides with Treasury yields climbing to levels not seen in years and oil prices pushing past $100 per barrel. When borrowing costs rise and energy gets expensive simultaneously, stock funds tend to feel the chill. This time is no different.
The numbers tell a clear story
The pace of money leaving US stocks looks even more dramatic when you zoom out. Global stock fund inflows averaged roughly $52 billion per week in July. By late August through early September, that figure had cratered to about $7 billion per week.
BofA strategists Jared Woodard and Michael Hartnett flagged the trend in their latest research note, warning that market volatility is likely to increase as investor caution deepens. The 30-year Treasury yield has reached its highest level since June 2007, which makes the risk-free return on bonds look increasingly attractive compared to the uncertainty baked into equities.
