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Global money market funds see huge demand for a seventh straight week

April 14, 2023By Reuters

April 14 (Reuters) – Global investors were big buyers in money market funds for a seventh straight period in the week to April 12 after a strong US jobs report heightened expectations that the US Federal Reserve would raise interest rates in May.

Funds in the global money market drew a net USD 40.83 billion worth of inflows compared with a net USD 61.12 billion worth of purchases in the previous week, data from Refinitiv Lipper showed.

Money market funds continue “to benefit from high US real rates that forces deposits out of the banking system,” brokerage Jefferies said in a note to clients.

If the fed funds rate is discounted by core personal consumption expenditure (PCE) inflation, the real interest rate is currently a positive 0.275%.

The yield on the 3-month US Treasury bill, in which money market funds invest the most, surged to near a 16-year high of 5.175% on Thursday.

Global equity funds, meanwhile, obtained USD 545 million, marking their first weekly inflow in three weeks.

Investors purchased communication services and financial sector funds of USD 974 million and USD 664 million, respectively, while selling a net USD 845 million worth of healthcare funds.

Global bond funds saw inflows dipping to USD 3.43 billion in the week from USD 16.45 billion worth of net buying a week ago.

Inflows in government bond funds slipped to a nine-week low of USD 2.33 billion, while high-yield funds faced outflows of USD 172 million. Global short- and medium-term bond funds received USD 1.57 billion, the biggest inflow in five weeks.

Among commodities, investors purchased USD 402 million of precious metal funds in their fifth consecutive week of net buying, while disposing of a net USD 147 million worth of energy funds.

Data for 23,942 emerging market funds showed equity funds received a third weekly inflow, worth USD 227 million, while bond funds had USD 913 million worth of outflows after two weekly net purchases in a row.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Tom Hogue)


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