Global bond funds see higher cash outflows on rate outlook

A security official is seen next to a monitor showing the price of the stock index and the exchange rate of the Japanese yen against the US dollar after a ceremony marking the New Year ceremony marking the opening of markets in 2022 at the Tokyo Stock Exchange (TSE), amid the coronavirus disease (COVID-19) pandemic, in Tokyo, Japan, January 4, 2022. REUTERS/Issei Kato

Jan 21 (Reuters) – Investors ramped up global bond fund selling in the seven days to Jan 19 as hawkish remarks from U.S. Fed officials amid rising inflationary pressure bolstered expectations that the central bank would tighten its monetary policy as of March.

Investors unloaded $4.12 billion from global bond funds, which topped previous weeks’ outflows by about 69%, according to data from Refinitiv Lipper.

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Investors sold US and European bond funds for $1.69 billion and $2.55 billion respectively, although they bought about $60 million in Asian funds.

Global high-yield and short-to-mid-term bond funds faced net sales of $2.63 billion and $0.83 billion respectively, marking a second consecutive week of outflows.

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

Global investors returned net buyers of equity funds with net purchases of $8.08 billion, albeit a five-week low.

Financial sector equity funds attracted inflows for a fourth consecutive week, worth $2.85 billion, healthcare saw purchases of $511 million, however, investors sold technology and consumer discretionary funds of $886 million and $514 million respectively.

Global money market funds saw the biggest weekly net selloff since at least late February 2020 as they faced outflows of $80.12 billion.

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

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

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

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