The CPI data offers hope that inflation is now on a sustained downward trend, which should allow the Federal Reserve to further reduce the pace of its interest rate hikes next month.
Bofa also pointed to the impact of the reopening of Chinese borders after the lifting of the COVID-19 restrictions, the drop in energy prices in the EU and the encouraging US fiscal and labor market data as factors that explain these movements.
According to the report, there were weekly flows into funds that invest in bonds ($17.5 billion), cash ($8.3 billion) and stocks ($7.2 billion), and into funds that invest in gold ($400 million).
BofA also noted that there had been the largest entry into investment grade bonds since July 21. ($10.4 billion), and the largest inflow into emerging market debt and emerging market equities since April 22 ($3.6 billion).
According to analysts, this is a “classic January twist”, in which the “losers of 2022 (cryptocurrencies, US Treasuries, China, credit and stocks) crush the winners of 2022 (cash and commodities). )”.
The European benchmark STOXX Index is trading at a nine-month high, Hong Kong’s Hang Seng Index is at a six-month high, and even bitcoin hit a two-month high following US inflation data.
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