Global bond funds log biggest weekly outflows in over five years

Global bond funds saw their largest weekly outflow in over five years in the week to April 9, as investors pulled back even from traditionally safer bonds amid recession fears and an escalating US-China trade war that are stoking concerns over inflation in the United States.

According to LSEG Lipper data, investors withdrew a net USD 25.71 billion from global bond funds during the week, the biggest amount for a week since April 1, 2020.

US Treasuries saw heavy selling this week after President Donald Trump escalated the trade war with China, lifting tariffs on Chinese imports on Wednesday to an effective rate of 145% and fuelling concerns that Beijing could raise its own duties. China did take that step on Friday, hiking its tariffs on US imports to 125%.

The benchmark 10-year US treasury yield has so far increased about 45.5 basis points to 4.45% this week, the biggest increase in a week since November 2001.

Some analysts said the selloff in US bonds signals a shift in global confidence, with Treasuries, long seen as the bedrock of the financial system, coming under strain from rising geopolitical tensions and doubts over US financial dominance.

By region, investors pulled a net USD 15.64 billion from US bond funds in the week to April 9, logging the biggest weekly net sales in over 27 months. Investors also ditched USD 12.72 billion worth of European funds, while Asian funds saw about USD 289 million worth of net inflows.

The high-yield bond funds and loan participation funds saw intense selling pressure as investors divested these funds to the tune of USD 15.92 billion and USD 6.69 billion respectively during the week.

Safe-haven money market funds saw a second straight week of net inflows, drawing in USD 25.8 billion.

Investors also pulled USD 10.7 billion from global equity funds amid sharp market volatility.

Sectoral equity funds posted record weekly outflows, led by financials, healthcare, and tech, which saw net redemptions of USD 3.23 billion, USD 1.21 billion,n and USD 867 million, respectively.

At the same time, gold and precious metals funds saw net inflows of USD 1.03 billion, marking their ninth straight week of gains.

Among emerging market funds, equity and bond funds logged their biggest weekly outflows in over four months, at USD 4.9 billion and USD 3.6 billion, respectively.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Frances Kerry)