Global bond funds draw biggest weekly inflow in eight months

Dec 8 – Global bond funds saw significant inflows in the seven days to Dec. 6, amid growing expectations of interest rate cuts in the US and Europe and signs of inflation waning.

Investors purchased a net USD 11.57 billion of global bond funds during the period, the most substantial weekly net buying since April 5.

Following US Federal Reserve Chair Jerome Powell’s cautious remarks on interest rate increases, US bond prices rallied, driving the 10-year Treasury yield which to a three-month low of 4.104% during the week.

European bond funds notably drew USD 11.03 billion, the highest since April 2021, while Asian funds gained USD 1.33 billion. US funds experienced USD 2.56 billion in net outflows.

Global high yield bond funds attracted USD 2.38 billion, but government bond funds saw USD 1.22 billion in outflows.

Meanwhile, demand for equity funds cooled as they received just USD 1.62 billion, the lowest weekly inflow in five weeks.

Financial sector equity funds still attracted USD 897 million, their biggest weekly inflow since July 19. Communication services also saw inflows of USD 518 million, while the healthcare sector experienced outflows of USD 414 million.

Meanwhile, global money market funds saw substantial demand as they accumulated some USD 83.71 billion, a seventh straight week of inflows.

Elsewhere, data for commodity funds revealed that energy funds had USD 121 million of net buying, the second weekly inflow in a row. Precious metal funds also witnessed USD 101 million worth of net buying, after net selling of USD 469 million previously.

Data covering 29,159 emerging markets funds showed investors stayed net sellers of equity funds for a 17th consecutive week, shedding a net USD 1.96 billion. EM bond funds, however, received USD 1.57 billion of inflows, after USD 761 million of outflows a week ago.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Alexander Smith)