(Reuters) – Global equity funds continued to post outflows in the seven days to Sept. 14 as a higher-than-expected inflation reading in the United States raised bets that the Federal Reserve will remain aggressive in raising interest rates for much longer.
Some investors expected the US CPI report to show a drop in inflation in August, and provide a path for the Federal Reserve to ease its policy tightening.
Data from the Refinitiv Lipper showed that investors sold $13.11 billion in global equity funds after withdrawing a net $23.02 billion in the previous week.
Graphic: Money Flows: Global Stocks, Bonds and Money Markets https://fingfx.thomsonreuters.com/gfx/mkt/zgpomoerepd/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg
Also weighing on sentiment was the threat of a global recession due to simultaneous increases in interest rates from major central banks, including the Federal Reserve, the European Central Bank and the Bank of England, to tame persistent inflation.
US and European equity funds faced net outflows of $10.52 billion and $2.74 billion, respectively, but Asia got about $740 million in inflows.
Among the sectoral funds, technology, communications and financial services recorded outflows of $1.15 billion, $611 million and $350 million, respectively, but consumer goods attracted $1.38 billion in inflows.
Graphic: Fund Flows: Global Equity Sector Funds https://fingfx.thomsonreuters.com/gfx/mkt/zdpxomwnavx/Fund%20flows-%20Global%20equity%20sector%20funds.jpg
Meanwhile, net selling of bond funds fell to a four-week low of $725 million.
Outflows from high-yield bond funds were down 96% from last week to $165 million, although net selling in short- and mid-term funds rose 29% to $1.48 billion.
However, demand for government bond funds for the third week remained at $4.85 billion from inflows.
GRAPHIC: Global Bond Fund Flows for the Week Ending September 14 https://fingfx.thomsonreuters.com/gfx/mkt/znpnewoqlvl/Global%20bond%20fund%20flows%20in%20the%20week%20ended%20Sep%2014.jpg
The data showed that money market funds had a net sell of $17.95 billion after posting a weekly inflow.
In the commodities space, energy funds received marginal $14 million in their second consecutive week of net buying, but precious metal funds were unfavorable for the 12th week with $794 million offshore.
An analysis of 24,516 emerging market funds showed that equity funds saw net sales of $989 million, while bond funds lost $1.35 billion in the fourth consecutive week of outflows.
Graphic: Money Flows: Stocks and Bonds in Emerging Markets https://fingfx.thomsonreuters.com/gfx/mkt/znvnewoknpl/Fund%20flows-20EM%20equities%20and%20bonds.jpg