LONDON, Sept 8 (Reuters) - The last week has seen the biggest inflow into U.S. government debt funds since last year's turbulent Brexit vote and the 25th straight week of moves into bonds globally, analysis of trading data by Bank of America Merrill Lynch showed.
Investors have poured money into almost everything including equities, emerging markets and gold funds, amid signs that inflation may not prove strong enough to allow major economies to move too far away from record-low interest rates.
The amount of stimulus provided this year by central banks like the ECB and Bank of Japan has also now reached a combined $2 trillion.
A total of $6.6 billion was moved into bond funds and $3.7 billion into equities over the last week, despite a minor outflow from U.S. stocks. A $1.3 billion went into gold funds too, which was the largest in over seven months.
There is "no disconnect between stocks and bonds," BAML's chief investment strategist Michael Hartnett said. The "best explanation for low (bond) yields and high stocks is $1.96 trillion of central bank purchases of financial assets in 2017 alone."
With inflation and U.S. interest rate hike expectations now drifting back again, there were small outflows from inflation-linked and bank loan-backed bonds, as well as banking stocks.
Emerging markets assets which tend to do well when investor confidence is high, extended their hot streak meanwhile. Fresh inflows of $1.7 billion to EM debt funds made it 32 gains in the last 33 weeks.
Emerging stocks funds chalked up inflows too. The biggest as a percentage of funds assets under management were into Russia which is making noises about cutting its interest rate again.
BAML analysts have cautioned regularly in recent months that equity markets are heading for a fall. This week though they said investors used brief sell offs when North Korea tensions have spiked, to buy into stocks.
They said Tuesday saw largest daily inflow to equities - $5.1 billion and mostly into U.S. and Japanese shares - in 6 weeks. (Reporting by Marc Jones; Editing by Toby Chopra)