Keep lengthy commodities and flip to lengthy gold vs. oil: BofA’s Hartnett

Investing.com — Cash market funds recorded the biggest outflows since April 2024, with $83.5 billion withdrawn within the week to January 15, Financial institution of America revealed in its newest report.

Throughout the week, shares noticed inflows of $13 billion, whereas bonds attracted $11.4 billion. Gold additionally gained momentum with $1.3 billion in inflows, whereas cryptocurrencies confronted a $900 million outflow.

BofA strategists led by Michael Hartnett mentioned commodities have been the best-performing asset for the reason that Federal Reserve’s 50 foundation level (bp) fee minimize in September.

He advises buyers to remain lengthy commodities amid rising international PMIs, rising Chinese language cash provide, and the height within the US greenback. Nonetheless, he suggests flipping from oil to gold “as Russia/Ukraine/Center East geopolitics flip from warfare to peace.”

For shares, Hartnett believes the draw back is protected by Trump’s insurance policies, however warns that the upside could also be “constrained by focus, valuation, positioning.”

The strategist is bullish on rate-sensitive sectors like homebuilders (XHB), utilities (XLU), financials (XLF), and REITs. As well as, BofA is lengthy worldwide equities in 2025, particularly Europe, China, and rising markets (EMs), citing “coverage easing, low cost currencies & valuation,” in addition to easing geopolitical dangers.

Regionally, US equities posted a 3rd consecutive week of inflows at $11.6 billion via Jan.15, whereas Japanese shares skilled their largest influx in 11 weeks at $1.1 billion.

EMs noticed $2.2 billion in outflows, and Europe marked its sixteenth straight week of redemptions, shedding $700 million.

In mounted earnings, investment-grade bonds prolonged their streak with $5.5 billion in inflows over 64 weeks. US Treasuries gained $3.5 billion, marking a fourth week of inflows. Nonetheless, high-yield bonds noticed outflows of $100 million, and rising market debt misplaced $300 million for the second consecutive week.

Financial institution loans remained a robust performer, including $2.1 billion of their fifteenth consecutive week of inflows.