Investors pulled $14.2 billion out of US equity funds over three weeks, the largest withdrawal since January, according to Bank of America. The exodus lines up with Treasury yields at multi-year highs and oil above $100 a barrel, though the S&P 500 itself has stayed in a tight range near its recent highs.
Investors have pulled $14.2 billion out of US equity funds over the past three weeks, Bank of America strategists say. It's the biggest withdrawal since January, and it isn't happening in isolation.
Yields climb to levels not seen in years
The 30-year Treasury yield reached its highest level since June 2007, making bonds look more attractive next to riskier equities. That move tracks a broader bond selloff: the 10-year Treasury yield touched 4.979%, its highest in almost three years, before easing back to 4.94%.
BofA strategists Jared Woodard and Michael Hartnett flagged the trend in their latest research note, warning that market volatility is likely to increase as investor caution deepens. Global stock fund inflows, which averaged roughly $52 billion per week in July, had cratered to about $7 billion per week by late August through early September.
Oil above $100 adds to inflation fears
Brent crude hit a four-month high of $109.97 a barrel before pulling back over 3.5% to $103.64 after foreign ministers in the Middle East were reported to be working out a deal to manage shipping through the Strait of Hormuz. Oil clearing $100 a barrel, driven largely by geopolitical tensions in the Middle East, has added to inflation fears ahead of the pivotal August CPI report.
Markets are pricing roughly a 67% probability of a Fed rate hike this month. According to Reuters: "Markets are pricing in a scenario of higher rates for longer", said Gustav Helgesson, macro strategist at SEB. JPMorgan analysts now expect eight of nine developed-market central banks to raise rates by year end.
Rotation, not panic
The S&P 500 has been trading in a tight range near its recent highs, with no broad market collapse accompanying the outflows. Instead, bond funds have seen increased inflows over the same period, pointing to a deliberate portfolio rebalancing rather than a full-blown retreat from risk assets.
This pattern echoes earlier moves in 2026: US equity funds saw multi-billion-dollar redemptions in both June and July before inflows resumed. BofA's Bull & Bear Indicator has also flagged growing risks from crowded positions in systematic trading strategies. Separately, with US midterm elections approaching, markets historically experience elevated volatility in the weeks surrounding major political events.
Sources: Crypto Briefing, Investing.com
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