Money market funds attract massive inflows as bond selloff bit
Oct 9 : Global money market funds drew strong inflows in the week ended October 7 as a global bond selloff, concerns over government debt levels in parts of Europe and lingering inflation fears pushed investors toward safer assets.
Investors bought global money market funds of a net $153.81 billion during the week, registering their largest weekly net purchase since May 6, LSEG Lipper data showed.
French bonds came under selling pressure last week, pushing the 10-year yield to a 24-year high of 4.994 per cent, amid concerns over the country’s wide budget deficit exceeding 5 per cent of GDP and a potentially divisive presidential election next year.
The US 10-year Treasury yield also climbed to a 24-1/2-year high of 5.3645 per cent on Wednesday, as higher oil prices raised fears that inflation could prove more persistent than expected.
Investors, meanwhile, made net purchases of $560 million in global equity funds — the smallest weekly inflow in three weeks.
European equity funds attracted $6.19 billion, their largest weekly inflow in four weeks. Investors also added a net $6.16 billion to Asian equity funds, but withdrew $5.11 billion from U.S. funds.
Among sectoral funds, technology, utilities and industrials recorded notable inflows of $5.37 billion, $1.10 billion and $1.03 billion, respectively. Financial sector funds, however, saw weekly outflows of $3.47 billion.
Global bond funds drew $26.03 billion in the week, their largest weekly inflow since July 8.
Short-term bond funds gained $9.36 billion, marking their largest weekly inflow in three months. Government bond funds and loan participation funds also recorded notable inflows of $4.65 billion and $1.89 billion, respectively.
Among commodity funds, gold and other precious metals funds recorded a fourth consecutive week of net purchases, totalling $1.41 billion. Investors also bought $269 million worth of energy funds.
In emerging markets, bond funds attracted $1.48 billion in weekly inflows, broadly reversing the prior week’s $1.86 billion in outflows. Equity funds, however, recorded a fifth consecutive weekly outflow of $752 million, according to data covering 27,895 funds.
