Investors turn to cash in on bettings that the Fed will stayfriendly

Bloomberg - Market participants this week turned to cash in the biggest exit in more than a year and piled into shares on bettings that the Federal Reserve will remain investor-friendly, according to Bank of America Corp.

Money-market funds had an outflow of about $62 billion in the week through Wednesday, the most since July 2020, BofA said in a note citing EPFR Global data. Reallocation of money by the BofA strategists as the tax redistribution threat recedes and Fed expected to remain Wall Street-friendly, said Michael Hartnett.

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The Fed will likely announce at its regular meeting next week that it is moving toward scaling monthly asset purchases and make a formal announcement in November, but would still hold interest rates near zero through 2022, according to a Bloomberg survey of economists. Investors have also been keeping track of Donald Trump's tax plan as moderate Democrats have balked at recent efforts to target the assets of rich people.

The seven-month rally in stocks stumbled in September over concerns about the rollback of monetary stimulus, inflation risks and China s regulatory crackdown. A number of major fund managers remain invested in stocks, as investors continue to be bullish on them, and cite a lack of investment alternatives.

Equity inflows were led by U.S. stock funds with an addition of about $46 billion, according to BofA. U.S. large caps have seen their biggest inflows on record and industry shares were investors favorites among sectors? Gold funds attracted $37 million, the largest amount in six weeks.