BofA: US equities record $1.8 bln outflow in latest week, Japan equities experience $4 bln outflow.

BofA: US equities record $1.8 bln outflow in latest week, Japan equities experience $4 bln outflow.

In the latest week, US equities experienced a notable outflow of $1.8 billion, according to data from Bank of America (BofA) Securities. This significant withdrawal from the US market follows a week that saw Japanese equities face a substantial outflow of $4 billion. These outflows highlight the volatile nature of global equity markets and the shifting investor sentiment.

The outflow from US equities comes amidst a period of uncertainty, with investors closely monitoring the ongoing fiscal negotiations in the United States. The potential for outsized deficits and the loss of the AAA credit rating have contributed to a cautious approach among investors. Additionally, the recent downgrade of Schaeffler AG, a German automaker, to "buy" from "underperform" by BofA Securities has added to the market's volatility [1].

In contrast, Japanese equities have experienced a significant outflow, with Japanese investors reportedly shifting their focus away from overseas debt markets. This shift is attributed to the rising yen volatility and the increased cost of currency hedging. The retreat from foreign bonds by Japanese life insurers, who manage over $2.6 trillion in assets, has led to a "diminishing presence" in overseas bond markets, potentially adding to volatility risks [2].

The US High Yield Index also saw notable movements in the first quarter of 2025, with the ICE BofA US High Yield Index rising 0.95% and the option-adjusted spread tightening by 63 basis points. The index's performance was driven by a 1.35% return for institutional shares, which outperformed the benchmark. However, the index faced challenges from underweight exposure to the banking and financial services sectors [3].

These market movements underscore the importance of staying informed and adaptable in the face of changing market conditions. Investors should closely monitor fiscal developments in the United States and the shifting preferences of Japanese investors as they navigate the complexities of the global equity market.

References:
[1] https://www.investing.com/news/stock-market-news/bofa-securities-doubleupgrades-schaeffler-ag-to-buy-on-strong-midterm-outlook-4054276
[2] https://www.zawya.com/en/news/insights/japans-portfolio-reshuffle-raises-red-flag-for-us-mike-dolan-pjhc2132
[3] https://seekingalpha.com/article/4789286-lazard-us-high-yield-portfolio-q1-2025-commentary