May 22, 2020 / 9:03 AM / 14 days ago

Bank of America calls top of cash mountain, cautions on 'fake markets'

LONDON (Reuters) - Analysts at BofA said the cash mountain stockpiled by investors during the coronavirus outbreak looks to have now peaked and cautioned that rampant central bank stimulus was fixing bond prices and creating “fake markets”.

The bank’s weekly analysis of fund flow data flagged up a $5.9 billion move out of cash-focused funds as the first outflow since mid February.

Equity funds saw their first drop in 12 weeks with a $7.6 billion outflow, whereas bond funds saw the largest inflow in 13 weeks and gold funds saw the second biggest increase ever with a $3.5 billion rise.

The bank’s analysts calculated that for the past 8 weeks central banks around the world have been buying a staggering $2.4 billion of financial assets an hour.

“Government and corporate bond prices have been fixed by central banks.. Why would anyone expect stocks to price rationally,” they said.

Reporting by Marc Jones; editing by Thyagaraju Adinarayan

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