June 26, 2020 / 10:02 AM / 17 days ago

UPDATE 1-Record inflow in Treasury inflation-protected securities-BofA

(Adds detail, reason for TIPS inflows)

By Olga Cotaga

LONDON, June 26 (Reuters) - Investors have poured $2.6 billion into Treasury inflation-protected securities (TIPS) in the week to Wednesday, BofA said on Friday, the largest amount ever, as they prepare for inflation to finally pick up.

U.S. stocks and oil were on course for the best quarterly return in 50 years, BofA said in the report.

Market participants see the recent explosion of government spending and central bank stimulus as a reason for inflation to finally rouse from its decade-long slumber.

Countries around the world have been rolling out massive spending packages in a bid to limit the impact of the coronavirus pandemic on their economies.

Investors have also bought gold, forests and property stocks.

Equities in the United States saw $6.6 billion of funds coming out, the largest outflows in seven weeks, while European stocks saw inflows for the past three of four weeks.

On top of that, gold funds saw the sixth largest weekly inflow ever, while the tech sector witnessed its biggest redemption since October 2019.

“We believe breakout in gold is a further big hint that three big themes of the early 2020s are end of globalisation, society voting for greater public sector intervention, and higher inflation,” BofA said in the report.

Money market funds saw $47.6 billion of redemptions in the past four weeks, though the “tentative inflection point” follows a “mammoth” $1.2 trillion of inflows, the bank said.

In total for the week, BofA said $19.2 billion went into bonds, $2.9 billion into gold, $7.2 billion out of equities and $7.6 out of cash. (Reporting by Olga Cotaga; Editing by Toby Chopra)

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