Precious metals enjoyed their second biggest inflows in the week to Wednesday, Bank of America Merrill Lynch said on Friday, as festering trade tensions and global growth woes triggered a rush for safe haven assets.
A total of $2.8 billion was sucked into precious metal funds during the week, while bond funds took in $9.2 billion in their 38th week of inflows. Meanwhile U.S. equity funds suffered their ninth largest outflows ever, losing $16.4 billion, said BAML citing EPFR data.
The moves come as investors grapple with a nearly 15-month trade war between the United States and China; warnings that Germany, Europe’s largest economy, is likely heading into recession; and a slowdown in China’s industrial output.
Reflecting investors’ nervy outlook, BAML’s “Bull & Bear” gauge moved back to 0.7 from 0.8 the week before, showing investor positioning is still “extreme bearish”, the bank said.
The bank said it remained “irrationally bullish” in its 2019 outlook as bearish investor sentiment and desperate central banks and policy makers, in addition to a bond “bubble”, led to an “overshoot” in credit and equity prices this autumn.
But BAML was “rationally bearish” for 2020 as the bond bubble pops and a trough in credit spreads, causing “Wall St deleveraging & Main St recession”, it added.