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Global bond funds see higher outflows on rates outlook

01/21/2022 | 08:18am EDT
A security official is seen next to a monitor showing the stock index price and Japanese yen exchange rate against the U.S. dollar at the Tokyo Stock Exchange in Tokyo

(Reuters) - Investors stepped up selling in global bond funds in the seven days to Jan. 19 as hawkish remarks from U.S. Fed officials amid rising inflationary pressure solidified expectations that the central bank will tighten monetary policy as early as March.

Investors offloaded global bond funds of $4.12 billion, that topped previous weeks outflows by about 69%, Refinitiv Lipper data showed.

Fund flows: Global equities bonds and money market https://fingfx.thomsonreuters.com/gfx/mkt/egpbkjdarvq/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg

Two-year U.S. Treasury yields, which track short-term interest rate expectations, rallied to a 23-month high this week after Federal Reserve officials last week signalled a policy rate hike in March.

Stoking fears that inflation may become more persistent, oil prices hit over a seven year high on Wednesday amid supply concerns and political tensions.

Investors sold U.S. and European bond funds of $1.69 billion and $2.55 billion respectively, although they purchased about $60 million worth of Asian funds.

Global high yield and short-and-medium term bond funds faced net selling of $2.63 billion and $0.83 billion respectively, which marked a second straight week of outflows.

Meanwhile, inflation protected, and government bond funds attracted inflows of $777 million and $528 million respectively.

Global bond fund flows in the week ended Jan 19 https://fingfx.thomsonreuters.com/gfx/mkt/egpbkjdarvq/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg

Global investors remailed net buyers in equity funds with net purchases of $8.08 billion, although a five-week low.

Financial sector equity funds drew inflows for a fourth successive week, worth $2.85 billion, health care saw purchases of $511 million, however, investors sold tech and consumer discretionary funds of $886 million and $514 million respectively.

Fund flows: Global equity sector funds

Global money market funds posted the biggest weekly net selling since at least end-Feb 2020, as they faced outflows of $80.12 billion.

Among commodities, precious metal funds attracted $328 million in inflows after an outflow in the previous week, although energy faced a second straight weekly outflow, amounting $60 million.

An analysis of 24,121 emerging market funds showed equity funds received $3.1 billion in net buying, the biggest inflow since mid-March 2021, while bond funds faced outflows of $2.07 billion.

Fund flows: EM equities and bonds

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Chizu Nomiyama)


© Reuters 2022
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