US Market Outflows Surge Amid Rising Tariff Volatility

Recent insights from Bank of America (BofA) suggest that rising market volatility, exacerbated by tariff issues, has prompted investors to retreat from US equities.

The financial giant reported a notable shift in capital flow, with US stocks witnessing an $8.9 billion outflow in the week before April 30th.

Meanwhile, European and Japanese markets have drawn in significant investor interest, with European equities gaining $3.4 billion and Japanese stocks attracting $4.4 billion over the same period. This contrast highlights a preference for international markets in the face of US uncertainties.

BofA’s findings also indicate a stark shift in the broader market dynamics. Since the US presidential election in November, every $100 invested in US stocks has been met with $5 in outflows, underscoring a growing reluctance to maintain exposure to US equities.

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In contrast to the US, riskier assets seem to be gaining traction. The crypto market alone saw a $2.3 billion inflow last week, while high-yield bonds attracted $3.9 billion. However, more traditional assets like gold and US Treasuries saw significant withdrawals, totaling $6 billion, as investors appear to be adjusting their strategies in favor of higher-risk opportunities.

Additionally, BofA notes that concerns over deflation are now more pronounced than inflation among its clients. In response, many have reallocated their portfolios toward safer, more stable investments, such as utility stocks and low-volatility, high-dividend exchange-traded funds (ETFs).

Earlier this year, BofA’s market experts cautioned that the US stock market’s recent rebound might be short-lived. They advised investors to take advantage of market rallies by reducing exposure to US stocks and the US dollar, suggesting that the ongoing decline of the dollar presents a prime opportunity for alternative investments.

Alexander Stefanov