Investors Flee Risk Assets, Pulling $23.5B From US Stocks
Investor sentiment soured significantly in late March, triggering a broad exit from risk assets. According to a March 27 Bank of America report, U.S. equity funds bled $23.5 billion in a single week, marking the largest outflow in 13 weeks. The retreat was widespread, with European stocks seeing $3.1 billion in outflows, the most since April 2025. The materials sector was hit particularly hard, losing a record $10.5 billion.
This risk-off move follows a period of market weakness. The S&P 500 has fallen 5% since Bank of America's Bull & Bear indicator first flashed a "sell" signal on December 17 of the previous year. While that signal has now officially ended as the indicator cooled from 8.4 to 7.4, the report stresses that market conditions are not ripe for a rebound. Historically, the three months after such a signal ends have produced an average S&P 500 return of just 1%.
Gold Outflows Hit $6.3B as Capital Pours Into Short-Term Debt
A stark rotation into safe havens accompanied the equity sell-off. Investors poured capital into short-term government debt, with U.S. Treasury funds absorbing $6.8 billion. In a more pronounced flight to safety, funds holding bonds with maturities under four years attracted $13.3 billion, the third-largest weekly inflow on record. In contrast, long-term bonds experienced a $4.7 billion outflow, the largest since March 2020.
Gold, often seen as a safe haven, failed to attract capital. Gold funds suffered a massive $6.3 billion outflow, the largest since October 2025. Analysis from JPMorgan suggests this weakness is due to accelerated ETF outflows and deteriorating liquidity in the precious metals market. This stands in contrast to assets like Bitcoin, which has reportedly seen more stable fund flows and improving momentum despite broader market stress.
BofA Warns "Buy Signal" Is Not Yet Triggered
Despite the significant market cooldown, Bank of America strategists led by Michael Hartnett argue that it is too early for contrarian investors to buy the dip. Several key internal buying indicators remain far from their trigger points. The bank's "Global Breadth Rule," for example, which requires 88% of global indices to trade below their key moving averages, has not been activated. Furthermore, the global fund manager survey shows cash levels at 4.3%, well below the 5.0% threshold that typically signals a buying opportunity.
The bank's baseline forecast is that weakening economic data will eventually force policymakers into a "policy panic easing" to stave off a recession. Until that capitulation occurs, strategists recommend patience, suggesting the current volatile, range-bound market is likely to persist through the November 2026 midterm elections.
