BofA: Investors pump $11.6 billion into US stock market in a ‎week ‎

Bank of America said that risky assets, such as stocks, are becoming more attractive, with investors pumping more liquidity in recent days, as inflation appears to have begun to subside.

According to CNBC, the S&P 500 rose 2% last week, gaining more than 100 points. While investors pumped $11.6 billion into the stock market last week, Bank of America analysts said, indicating that investors are becoming increasingly optimistic about risky assets with the continued decline in the pace of inflation.

Inflation rose 3% year-on-year last month, according to the June CPI report. This is well below the 41-year-old headline inflation record of 9% achieved last summer. Bank of America strategists said that the drop in the consumer price index, in addition to the decline in the producer price index on Thursday, led the markets to declare the Fed’s “mission accomplished” in combating inflation.

“The full cycle is now complete,” the strategists said in a note on Thursday, referring to the rise in inflation from 2% to 9%, and then back again to 3%.

Quieter inflation bodes good news for stocks, and increases the odds that the US economy can avoid a nasty recession. The so-called “soft landing” would be an impressive achievement for the Fed, as it managed to bring down inflation without crushing economic growth and sparking high unemployment.

However, some experts warned that inflationary pressures remain a threat, with core inflation accelerating by 4.8% yoy from last month. San Francisco Fed President Mary Daly said underlying inflation pressures still needed to be addressed, noting before the release of the June consumer price index that two more rounds of rate hikes may be needed.

But the markets expect only one rate hike before the Fed pauses. Investors see a 96% chance of a 25 basis point hike in July, and an 81% chance that the Fed will hold interest rates at that level in September, according to CME FedWatch.