BofA flow data shows risk-asset signals turning neutral to cautious

Overview

"The Flow Show" is Bank of America's cross-asset flow and strategy note published on 2026-04-02. The report focuses on flows across equities, bonds, gold, cash, crypto, and regional/sector groups, and combines that with the BofA Bull & Bear Indicator, the global breadth rule, and private client allocation to judge the state of risk assets. The backdrop includes a slowing US labor market, yield-curve changes, renewed geopolitical and trade-policy risks, and the potential credit risk from AI data-center capex.

Core views

The report argues that the market is in a phase where the soft landing still needs to be confirmed. Equities continued to see notable inflows this week, with US equities back in positive flow and technology, energy, and materials receiving support. But credit saw meaningful outflows, and Europe, Japan, EM equities, as well as consumer, financial, and healthcare sectors weakened. The BofA Bull & Bear Indicator fell to 6.3 and is neutral, indicating that the earlier overheating signal has eased, but there is not yet a broad capitulation-buy signal. The report also emphasizes that if bitcoin, private credit, software, and banks can stabilize against a backdrop of peaking yields and a steeper curve, the odds of a soft landing improve; if they cannot stabilize, hard-landing risk rises.

Analysis framework

The report cross-checks fund-flow data, cross-asset YTD returns, private client AUM allocation, market breadth, credit spreads, and macro employment indicators. On the flow side, it breaks out asset classes, bond segments, regional equities, styles, and sectors; on the macro side, it focuses on the relationship between the US quits rate, Fed rate-cut expectations, nonfarm payrolls, and S&P 500 earnings expectations; on the strategy side, it uses the BofA Bull & Bear Indicator and the global breadth rule to judge whether risk assets are overbought, oversold, or close to a buy signal.

Methodology notes

• Sentiment and positioning indicatorsBofA Bull & Bear Indicator

  Multi-dimensional risk appetite indicator

  The indicator fell from 7.4 to 6.3, and the report labels the current signal as neutral; the decline was driven by deteriorating global equity breadth, HY bond outflows, and wider spreads in HY and subordinated bank debt.

• Market breadthBofA Global Breadth Rule

  Stock index positioning relative to the 50-day and 200-day moving averages

  A net 16% of MSCI ACWI stocks are below their 50-day and 200-day moving averages, still far from the -88% equity buy signal, which indicates that a broad oversold entry point has not yet appeared.

• Flow analysisGlobal asset class flows

  Track fund flows by asset class, region, style, and sector

  The report uses weekly and YTD flows to identify market preference, for example equities, gold, and US stocks attracting inflows while credit, European equities, Japanese equities, and consumer and financial sectors remain under pressure.

• Macro validationUS quits rate and payrolls framework

  The relationship between the labor market, Fed policy, and corporate earnings expectations

  The report argues that the quits rate continues to point toward Fed rate cuts rather than hikes, but a still-strong labor market would help prevent S&P 500 earnings expectations from being revised down along with share prices.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• US equities

  Flow improvement, but the rebound needs confirmation

  Strengths

  US equities saw $9.8bn of inflows this week, and both large caps and growth stocks received support.

  Weaknesses

  The recent S&P 500 rebound may be constrained near the 50-day and 100-day moving averages, and the report says there is no capitulation-style positioning signal.

  Comparison

  US equity flows are stronger than those for Europe, Japan, and EM equities.

  Risks

  If weaker employment causes earnings expectations to be revised down, or if credit, banks, and software fail to stabilize, the rebound may fail.

• Gold and precious metals

  A marginal beneficiary within the defensive and commodity themes

  Strengths

  Gold saw $0.9bn of inflows this week, the first in five weeks; gold is up 7.2% in 2026 YTD.

  Weaknesses

  Its YTD gain is smaller than that of oil and commodities.

  Comparison

  Oil and commodities have materially outperformed gold YTD, but gold flows have improved.

  Risks

  If risk appetite recovers quickly or real yields move higher again, the improvement in gold flows may not last.

• Credit bonds IG/HY

  A risk-stress signal

  Strengths

  Overall bonds still saw $3.3bn of weekly inflows, and government bonds and TIPS have seen inflows for the past nine weeks.

  Weaknesses

  IG and HY bonds combined saw $7.9bn of outflows, and the widening of HY spreads was one of the key reasons for the decline in the Bull & Bear indicator.

  Comparison

  Government bonds/Tsy and TIPS flows are stronger than IG/HY credit bonds.

  Risks

  If credit outflows and spread widening continue, they will weaken the soft-landing narrative and pressure risk assets.

• Technology and software

  A confirmation asset in the flow divergence

  Strengths

  The technology sector saw about $2.4bn of inflows this week, and the text also notes $2.1bn of technology inflows, the largest in four weeks.

  Weaknesses

  The report identifies software as a highly rate-sensitive asset during the earlier liquidity shock and flags bearish views on AI hyperscaler corporate debt.

  Comparison

  Technology flows are stronger than those in consumer, financials, and healthcare, but software and AI-related credit risks remain emphasized.

  Risks

  AI data-center capex, financing pressure from layoffs, and repricing in credit markets could weigh on related assets.

• European, Japanese, and EM equities

  Regional flows remain under pressure

  Strengths

  Some private clients bought Japanese ETFs over the past four weeks.

  Weaknesses

  European equities saw $3.5bn of outflows, Japanese equities saw $0.8bn of outflows, and EM equities returned to $3.4bn of outflows.

  Comparison

  These are clearly weaker than US equities, which returned to inflows this week.

  Risks

  Moves in the dollar, trade policy, geopolitics, and regional growth expectations could continue to affect cross-border flows.

Key data

• Weekly equity flows$11.6bn inflowOf this, ETFs saw $15.6bn of inflows while mutual funds saw $4.1bn of outflows.
• Weekly bond flows$3.3bn inflowHowever, IG and HY bonds combined saw $7.9bn of outflows, the largest since April 2025.
• Weekly gold flows$0.9bn inflowThe first inflow in five weeks, with a marginal improvement in the precious-metals theme.
• Weekly cash flows$2.0bn outflowCash outflows coincided with equity inflows, but private client cash allocation remains at 11.0%.
• BofA Bull & Bear Indicator6.3Down from 7.4, the lowest since June 2025, and the signal is neutral.
• BofA private client AUM$4.1tnAllocation is 63.0% equities, 18.6% bonds, and 11.0% cash; the equity share is the lowest since May 2025.
• US equity flows$9.8bn inflowUS equities returned to inflows; large caps saw $7.7bn of inflows and growth stocks saw $0.5bn of inflows.
• European equity flows$3.5bn outflowTwo-week cumulative outflows reached $6.6bn, the largest since December 2024.
• Sector flowsEnergy $2.8bn, technology $2.4bn, materials $1.2bn inflowConsumer $1.1bn, financials $1.8bn, and healthcare $1.0bn outflows.
• 2026 YTD cross-asset returnsoil 94.3%, commodities 52.2%, gold 7.2%, US stocks -3.8%, bitcoin -23.6%Oil and commodities are far ahead, while bitcoin is a clear laggard.

Impact & implications

The investment implication is that, after the Bull & Bear signal has eased back to neutral, risk assets are no longer in an extreme sell-signal zone, but they have also not reached a broad buy-signal condition. As a result, any equity rebound needs confirmation from credit, software, bitcoin, and banks. Flows show relative strength in US equities, technology, energy, materials, and gold, while Europe, Japan, EM equities, credit, consumer, financial, and healthcare sectors remain under pressure. On the macro side, labor-market weakness supports rate-cut expectations, but earnings expectations still need support from employment data. On policy, trade, tariffs, geopolitics, and AI data-center capex are the key risks for Q2.

Risks

• Deteriorating credit-bond flows and wider spreads may signal that the risk-asset rebound lacks a foundation.
• If US employment cannot stay strong enough, S&P 500 earnings expectations may be revised down along with share prices.
• Trade policy in Q2 may again become a tool for the US to pressure both allies and rivals, and expanded tariffs on pharmaceuticals, steel, aluminum, and copper would add uncertainty to markets.
• If bitcoin, private credit, software, and banks cannot stabilize against the backdrop of peaking yields and a steeper curve, hard-landing risk rises.
• AI data-center capex may create capital-misallocation risk similar to a skyscraper curse, especially for AI hyperscaler-related corporate debt.
• Backtested indicators and strategy results do not represent the performance of actual accounts or funds, and historical relationships may fail in future market environments.

What to watch

• Whether the BofA Bull & Bear Indicator keeps falling or moves back toward the extreme buy/sell zones.
• Whether the share of MSCI ACWI stocks below their 50-day and 200-day moving averages moves closer to the -88% buy signal.
• Whether IG/HY bond flows, HY spreads, and subordinated bank debt spreads continue to deteriorate.
• The 2-year UST yield, the degree of curve steepening, and Fed rate-cut expectations.
• Whether S&P 500 2026E EPS stays near about $323 or is revised down along with share prices and employment data.
• Whether inflows into US equities, technology, energy, materials, and gold continue, and whether outflows from Europe, Japan, EM, and consumer/financials/healthcare ease.
• The impact of Trump approval, the probability of the US midterm elections, trade policy, and tariff expansion on markets.