BofA strategists say US equity outflows and slowing global flows raise the risk
of sharper volatility as markets and policymakers remain complacent about rising
US Treasury yields. EPFR Global data show US equity funds recorded $14.2bn of
outflows over the past three weeks, the largest since January. Global equity
fund inflows averaged $7bn per week over the same period, down from $52bn in
July. Despite oil topping $100/bbl and record diesel prices, the Fed is still
discussing data-dependent rate hikes. BofA strategists, including Michael
Hartnett, note that the 30‑year Treasury yield is at its highest since June 2007
and commodities have surged, yet there is little sign of market panic — a
combination they call a recipe for heightened volatility. The team also warned
that despite roughly $1.5 trillion invested in AI over the past three years,
there is little evidence of broad-based productivity gains; total factor
productivity has slipped below trend and has been highly correlated with
consumer confidence over the past 50 years.
