Bank of America strategist Michael Hartnett remains bullish on commodities and gold. He believes that various policy measures aimed at curbing bond yields are having a real impact on the direction of financial markets. Hartnett and his team wrote in a research report: "The emergency policy response is taking effect." When discussing actions taken by various parties to support key market levels (such as maintaining gasoline at $4/gallon, holding the USD/JPY exchange rate above 160, and preventing US Treasury yields from exceeding 5%), the team noted the strengthening of the yen. Hartnett mentioned that central banks around the world tend to continue raising interest rates. Policymakers want to maintain the credibility of their policies to alleviate upward pressure on bond yields. From an investor's perspective, he recommends continuing to hold commodities and assets classified as currency devaluation hedges, such as gold. He also reviewed the long-term rolling returns of various asset classes: the ten-year rolling return of US stocks is approximately 15%, commodities are approximately 11%, while the ten-year rolling return of US Treasury bonds is -2%. Hartnett stated that this data represents the worst decade performance for Treasury bonds in the past century. He compared the current long-term return environment with historical periods: stocks to 1939, 1974, and 2009; commodities to 1933 and 2018. The US midterm elections add further uncertainty to the market outlook. Hartnett believes that investors are not currently overly concerned about the risks of the upcoming US midterm elections, while simultaneously weighing several possible outcomes. Looking at the Senate race, he judges the probability of a Democratic landslide victory in both houses to be low; he also observes that the current administration is increasingly relying on executive orders to advance affairs rather than going through congressional legislative processes. On the other hand, the report mentions that Trump's approval rating has fallen back to the 35%-40% range. Historically, in the two months leading up to a midterm election, the average approval rating of a former president is 53%. The market currently predicts a 50% probability of a Democratic sweep of both houses. Hartnett extrapolates that if a Democratic landslide does occur, the market will likely enter a risk-averse mode—the stock market could fall by more than 10%, the dollar weaken, and bond yields decline. Conversely, if the Republicans unexpectedly win both houses, market risk appetite will further increase. If the Republicans win the Senate and the Democrats control the House, it would be a mildly positive situation for risk assets, often referred to as the "Goldilocks effect" (a lukewarm response). Weekly Fund Flows: Cash and Fixed Income are the Most Favored Sectors As of September 2nd, fund flow data for various types of funds: Cash funds: Net inflow of $30 billion, the highest among all asset classes; Bonds followed closely: Net inflow of $18.3 billion; Gold: Net inflow of $3.2 billion; Equities: Only a net inflow of $2.8 billion, the smallest weekly inflow in nine weeks. Breakdown of bond categories: Investment-grade bonds: Inflow of $9.2 billion, marking 22 consecutive weeks of net inflows; US Treasury funds: Inflow of $6.2 billion, recording positive inflows for the 10th consecutive week; High-yield bonds: Inflow of $1.5 billion; Bank loans: Outflow of $600 million, the first weekly withdrawal in 13 weeks. Equity markets by region: Japanese stocks: $1.4 billion inflow, the second consecutive week of net inflows; European stocks: $800 million inflows; US domestic stocks: $5.9 billion outflow, the second consecutive week of capital flight; Emerging market stocks: $5.4 billion outflow; Chinese stocks: $5.3 billion outflow, the fifth consecutive week of capital outflow. Sector-specific funds: Technology-themed funds: $1.5 billion outflow, the largest single-week outflow since June; Financial-themed funds: $900 million outflow, the fifth consecutive week of capital withdrawal.