Money market funds attract massive inflows as bond selloff bit

Money Market Funds Attract Massive Inflows as Bond Selloff Bites Investors

Global Investment Trends Amid Bond Market Volatility

Money Market Funds See Record Inflows

Oct 9 (Reuters) - 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.

Bond Market Developments

European Bond Pressures

French bonds came under selling pressure last week, pushing the 10-year yield to a 24-year high of 4.994%, amid concerns over the country's wide budget deficit exceeding 5% of GDP and a potentially divisive presidential election next year.

US Treasury Yields Rise

The US 10-year Treasury yield also climbed to a 24-1/2-year high of 5.3645% on Wednesday, as higher oil prices raised fears that inflation could prove more persistent than expected.

Equity Fund Flows

Global and Regional Equity Trends

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.

Sectoral Fund Movements

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.

Bond Fund Inflows

Short-Term and Government Bonds

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.

Commodity and Emerging Market Funds

Commodity Fund Trends

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.

Emerging Market Fund Flows

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.

(Reporting by Gaurav Dogra; Editing by Leroy Leo)