BofA Says Rush to Cash Is Now at Fastest Pace Since Pandemic

11.4.22 - The Mad Dash to Cash

Gold last traded at $1,681 an ounce. Silver at $20.85 an ounce.

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(Bloomberg) -- Cash is king, with investors fleeing to the safety of cash funds at the fastest pace since the coronavirus pandemic as the Federal Reserve remains firmly hawkish, according to strategists at Bank of America Corp.

The asset class had inflows of $62.1 billion in the week through Nov. 2, according to a note from the bank citing EPFR Global data. That's contributed to $194 billion of inflows into cash from the start of October -- the fastest start to a quarter since the pandemic roiled markets in the second quarter of 2020.

Bank of America's strategists don't expect the Fed to pivot anytime soon as inflation remains high and unemployment is low. "Lesson is job losses catalyst for 2023 pivot," strategists led by Michael Hartnett wrote in the Nov. 4 note.

A recession and credit events will need to occur for the Fed to end tightening, prompting the start of a new bull market, Hartnett said. Data today showed that US businesses reported strong hiring and wage increases in October although the unemployment rate climbed.

Hartnett's comments come after Fed Chair Jerome Powell indicated this week that he's prepared to push interest rates as high as needed to stamp out inflation, even as the central bank eyes a downshift to a slower pace of increases. The Nasdaq 100 closed at the lowest level since July 2020 on Thursday, with the gauge on track for its worst week since January. The S&P 500 is set for its worst week since September.

Among other asset classes, global equity funds saw $6.3 billion of inflows in the week, while nearly $4 billion was pulled from bonds, according to the EPFR data.