Global money market funds attracted robust inflows in the week to Aug. 9, reflecting investor caution ahead of US inflation readings and as Chinese economic data remained weak.
Investors ploughed $73.17 billion into money market funds in their biggest weekly net purchase since March 22, data from Refinitiv Lipper showed.
Inflation data released on Thursday showed US consumer prices increased moderately in July, boosting expectations that the Federal Reserve will leave interest rates unchanged next month.
Weak economic data from China, where exports and imports contracted in July, also affected risk sentiment.
US money market funds attracted a net $40.88 billion in inflows while in Europe and Asia net inflows stood at $23.4 billion and $13.15 billion, respectively.
Higher-risk equity funds suffered $11.71 billion worth of net selling, the biggest weekly outflow since June 21.
Investors exited metals & mining, financials and tech sector funds by around a net $891 million, $554 million and $524 million, respectively, while healthcare drew about $1.39 billion in net inflows.
Global bond funds were in demand for a seventh successive week, attracting a net $7.04 billion.
Global corporate bond funds drew about $1.16 billion and government bond funds a net $2.71 billion, the biggest amount since July 12.
Among commodity funds, precious metal funds suffered an 11th weekly outflow, of about $810 million, and a net $163 million left energy funds.
Data for 24,043 emerging market funds showed that investors placed about $264 million into equity funds in a fifth straight week of net buying. Meanwhile, bond funds faced their biggest weekly net outflow in nine months at a net $1.74 billion.
US Treasury yields rose to one-week highs on Friday after producer price inflation in July came in hotter than economists’ expectations, a day after data showed consumer prices rose modestly during the month.
The producer price index for final demand rose 0.3 percent last month as the cost of services rebounded at the fastest pace in nearly a year, beating expectations for a 0.2 percent gain. In the 12 months through July, the PPI increased 0.8 percent after gaining 0.2 percent in June.
The pick-up in the annual rate happened because prices were lower last year. Economists had predicted a 0.7 percent annual increase.
Traders are nervous that a resurgence in price pressures could increase the chances that the Federal Reserve will need to continue hiking rates.
Some analysts said, however, that the data was not very far from what was expected.
Will Compernolle, a macro strategist at FHN Financial, noted that there were downward revisions to June’s report, and that the so-called core, core number, which excludes food, energy and trade services, was in line with expectations.
The producer price data also comes a day after consumer prices rose by just 0.2 percent in July as higher rents were mostly offset by declining costs of goods such as motor vehicles and furniture. – Reuters
