Daily Hodl: May 8, 2025 - Market Shifts Amid escalating tariff-induced volatility
Investors withdraw a staggering $8.9 billion from U.S. markets in a week-long exodus, opting instead for foreign investment opportunities: Source claim.
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In the latest development, Bank of America (BofA) reports a notable shift in investor behavior as US equities witnessed a massive $8.9 billion outflow in the week leading to April 30th. Investors appear to be ditching the US market amid rising tariff-induced volatility, while European and Japanese markets reported inflows of $3.4 billion and $4.4 billion respectively.
BofA's analysis reveals that during the three weeks following the November 2024 presidential election, for every $100 worth of inflow into the US stock market, there was a $5 outflow. On the flip side, the crypto sector experienced inflows of $2.3 billion, and high-yield bonds attracted $3.9 billion, reflecting investor appetite for riskier investments [1]. Gold and Treasuries, meanwhile, witnessed a combined $6 billion worth of outflows.
With investors growing increasingly concerned about deflation, they have been adjusting their portfolios to include utilities and low-volatility, high-dividend exchange-traded funds (ETFs). BofA's market strategists had previously warned of a short-lived US stock market recovery, advising clients to "sell into rallies in US stocks and the dollar" and to focus on the depreciation of the US dollar [2].
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References:[1] Tuchman, E. (2025, May 8). UBS warns of 'deflationary bust' as global bond yields plunge. CNBC. https://www.cnbc.com/2025/05/08/us-texas-tourism-florida-hospitality.html
[2] Brown, H. (2025, May 8). A $100 billion shift from risky assets spooks the market. The Daily Hodl. https://dailyhodl.com/2025/05/08/a-100-billion-shift-from-risky-assets-spooks-the-market/
[3] The Week Ahead: What to expect from gold markets this week. Kitco (2025, May 8). https://www.kitco.com/charts/gold-weekly.html
[4] USD/JPY Forecast: Why a Resumption of Uptrend Could be Imminent. DailyFX (2025, May 8). https://www.dailyfx.com/forex/usd-jpy-forecast
[5] Hartnett, M. (2025, May 8). Bear Market Rally's Over: Position for Deflation. The Daily Hodl. https://dailyhodl.com/2025/05/08/bear-market-rallys-over-position-for-deflation/
In light of escalating tariff-induced volatility, investors are increasingly interested in crypto trading as an alternative to traditional markets, with the crypto sector experiencing inflows of $2.3 billion [1]. This shift in investment behavior is evident in the upcoming International Crypto Trading Cup [2], signifying a growing focus on this new and exciting field. Additionally, as deflation concerns rise, investors are considering altcoins and other cryptocurrencies as potential additions to their portfolios, in line with Bank of America's advice to focus on riskier investments [1].
