Inflows into cash funds totaled $29 billion in the week to Wednesday, while global investors also bought $13 billion of equity funds and $9.8 billion of bonds, BofA said, citing figures from funds data provider EPFR.

Fears about a looming recession have kept many investors holding large cash positions throughout the first half of this year, even though the surprising resilience of the global economy has helped equity markets to rally sharply.

Among equity investment trends, weekly inflows into Japanese stocks stood at $8.9 billion, their fifth straight week of inflows, while U.S. large caps saw their largest inflow in eight months of $12.9 billion.

The BofA data captures flows in the week to Wednesday, before key U.S unemployment data on Thursday raised expectations that the Federal Reserve will resume rate hikes in July after June's pause.

The data caused a sharp selloff in which equity markets tumbled and short-dated bond yields on both sides of the Atlantic climbed past March levels to post-financial crisis highs.

"Financial conditions tightening again in early-Q3, keeps the 'higher-for-longer/hard landing' view entrenched," said BofA in the report, noting that a further tightening of financial conditions in the third quarter would create a great opportunity for investors to position for a hard economic landing.

Inflows into developed markets equities have for the first time since November 2022 trended higher than inflows into emerging markets equities, totaling $31 billion and $14 billion respectively over the last eight weeks.

The BofA "bull & bear" indicator, which measures market sentiment and is based on a series of technical market measures, remained unchanged, being more bearish than bullish at 3.2, where 10 is extremely bullish and 0 is the opposite.