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Bonds suck in $26 bn, pricing in US Democrats win: BofA

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LONDON: Bond funds have seen the second-largest weekly inflows ever of $25.9 billion, BofA mentioned on Friday, because the market continues to cost in a Democrats victory in subsequent month’s U.S. presidential election, which may imply much more fiscal stimulus.

“Blue wave election outcome (Democrats winning) has curiously flipped from consensus bear to bull catalyst in recent months,” the U.S. funding financial institution mentioned.

Riskier excessive yield bond funds attracted $5 billion within the week to Oct. 7, the best in 11 weeks, whereas authorities bond funds sucked in $3.eight billion, the most important inflows in 14 weeks.

Equity funds, in the meantime, attracted $4.Four billion, primarily pushed by U.S. equities, BofA mentioned, including it anticipated the “top” in asset costs to come back between U.S. election day on Nov. Three and the inauguration of the brand new president in January 2021.

In the fourth quarter, it expects banks, vitality and small cap shares to rally, and 10-year Treasury bond yields to rise to 1%.

The financial institution additionally highlighted the probability of renewable vitality shares front-running a Democratic victory in presidential and Congressional elections, plus extra fiscal stimulus, pointing to 1 photo voltaic vitality change traded fund’s stellar efficiency.

Invesco photo voltaic ETF has soared 255% from its March lows and gained 42% within the final month alone.

“A ‘blue wave’ clean sweep which could see Dems in control of the Oval, Senate and House is seeing money pile into renewables”, a London-based dealer mentioned.

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