LONDON, (Reuters) – Investors have poured money into bank loans and cash since the beginning of the year and rushed out of U.S. Treasuries as the global market has been preparing for higher interest rates.

Analysts led by Michael Hartnett of the U.S. Investment Bank, stated in a note that “Rates shock 2022 will be followed inflation shock 2021” and that financial conditions would tighten significantly.

The minutes of this week’s U.S. Federal Reserve December policy meeting showed that policymakers have begun to prepare for an earlier trajectory in interest rate rises. The U.S. Federal Reserve and Britain’s money markets expect rate increases as soon as March.

BOFA strategists found that the global central bank bought $26 Billion of assets each trading day in this pandemic period. This has driven up global equity markets capitalization by $133B daily.

In 2021 alone, the total equity inflows by investors was $949 billion. This is more than double the amount of cumulative inflows during the past twenty-five years.

Weekly, the U.S. Treasuries outflow was $2 billion. Energy stocks also saw significant inflows while European Equities recorded their first inflows for eight weeks.

Although equity flows are not yet at risk, cash levels continue to rise. BofA noted that the 11.2% cash level of ‘private client’ BofA manages $3.3 trillion in assets was the highest since April 2017. The past week also saw the greatest cash flow since July 2020.