2023-09-10 14:41:14
US markets benefit from the strength of the dollar and bond yields
The strength of the dollar contributed to an increase in foreign financial flows to US markets, while threatening a significant decline in risky assets and increasing the flight of investments from emerging markets, according to what was stated in a banking report, today, Sunday.
Bank of America, an American bank, said that large cash flows amounting to $68.4 billion entered the American market during the past week and until Wednesday, which represents the largest flow to the Wall Street market in nine weeks.
This influx comes despite tightening fiscal policy, allowing bond yields and the dollar to rise. In terms of asset allocation, stocks attracted inflows of $2.2 billion, bonds saw $4 billion, while gold saw outflows of $700 million.
According to the report, which was reported by Investing.com on Sunday, strategists at Bank of America expect oil prices to rise, the strength of the dollar to grow, and bond yields to rise. The bank believes that all of this may work against trading in risky assets.
The bank said in its report: “The sharp decline in risky assets is likely to reach about 20% in the coming months,” but it indicated that higher bond yields, oil and the dollar for a longer period, and tighter monetary conditions, may lead to the possibility of a greater decline in the six months. Coming.
Regarding the American sectors that were affected, the Bank of America report said: “Outflows from the American market included the technology sector, which witnessed its first outflows in 11 weeks, valued at $1.7 billion, and telecommunications companies, which witnessed the largest outflows since September 2022, valued at $300.” million dollars, and small businesses in the United States with the largest outflows in 11 weeks at $1.5 billion.”
The report indicated that emerging markets witnessed their first outflows in nine weeks worth $500 million, and Japan witnessed its largest outflows since last May, worth $600 million, and Europe recorded its twenty-sixth week of outflows worth $66 million.
In terms of fixed interest instruments, US Treasury bond flows rose for the thirtieth consecutive week by $2.6 billion, according to the report, but emerging market debt witnessed its sixth consecutive week of outflows worth $600 million.
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