Investors Poured into US Stocks at Fastest Pace in Three Months, BofA Reports

Investors poured capital into U.S. stocks at the fastest rate in three months while simultaneously withdrawing from corporate debt, a sign of shifting sentiment amid tightening central bank policy and persistent inflation. The moves were detailed in a Bank of America Global Research report released Friday, which highlighted potential peaks in market positioning, policy, and profits.

A Shift in Capital Flows

The bank's weekly "Flow Show" report, which analyzes data from EPFR, showed a significant rotation into equities for the week ending Wednesday. At the same time, investors showed caution toward the corporate bond market.

• Total Stock Inflows: A net $79.3 billion moved into global stocks.
• U.S. Stock Inflows: U.S.-focused equity funds attracted $63.8 billion of that total.
• Bond Outflows: Investment-grade bonds saw withdrawals of $1.0 billion, while high-yield bonds experienced outflows of $2.5 billion.

This trend comes as major central banks globally have either raised interest rates or signaled their readiness to do so to combat price pressures, with oil prices remaining above $100 per barrel.

BofA's Outlook: Peaking Indicators

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Bank of America analysts suggested that the market may be at a turning point, pointing to what it calls the "three Ps" — positioning, policy, and profits — as all potentially peaking. The report noted that investor positioning remains overly bullish, corporate profits look set to peak next year, and the era of accommodative monetary policy is ending.

"Clearly, the 'run it hot' policy posture is done," the bank stated, referring to the Federal Reserve's shift toward a more hawkish stance to control inflation.

Fourth-Quarter Risks on the Horizon

Looking ahead, BofA identified three key risks for the fourth quarter, dubbed the "three Cs": commodities, credit, and Chinese bonds. A basket of commodities has already surged 47% in 2026, threatening to fuel further inflation.

Analysts also warned that high-yield credit spreads are near record lows. A "sudden repricing of credit risk would be the most likely signal that the Fed is overestimating GDP," the bank said. Finally, the report pointed to a potential deflationary "China Shock 2.0" in Europe, as evidenced by Germany's record trade deficit and falling industrial output, noting that China is the only major economy with falling bond yields this year.