Brexit marked low-point for bond yields, BofA Merrill says

Brexit marked the 2016 low for bond yields, strategists at Bank of America-Merrill Lynch said in a report titled "The Day QE died", although fixed income - albeit not those for Treasuries - continued to see large inflows of clients´ funds.

Indeed, the 'lust for yield' had continued, with inflows of $102bn into bond funds and $25bn of equity outflows.

The Prime Minister´s remarks against quantitative easing, rumours of QE-tapering by the European Central Bank, rising Fed hike expectations and crude oil price had all put upward pressure on bond yields, the strategy team led by Michael Hartnett said.

Implicitly, G-20 politicians had reached the conclusion that they needed to spend more voters instead of on bonds, they said.

Nevertheless, EM market debt funds continued to put in a strong performance, with $2.0bn of inflows, alongside those for high yield debt at $2.5bn and investment grade bonds ($4.9bn).

On the other side of the coin, European equity funds saw $1.6bn in outflows while $7.2bn headed for the exit at US equity funds.

Purchases of Treasury Inflation Protected Securities also picked up a tad, rising for a 17th straight week and by $0.6bn.

Precious metals funds saw only modest inflows of $0.6bn.

Looking out to the US non-farm payrolls report for September, a "strong" payrolls report with jobs creation running at above 225,000 and average hourly earnings ahead of 2.7% year-on-year would see banks perform better than bonds.

On the flip side, a "weak" report with job growth running below 140,000 would lead to a short reprieve for bond proxies and see an uber-tech melt-up.