Global bond funds experienced the largest weekly outflow in more than five years in the week ending on April 9. This was due to investors withdrawing money, even from usually safer bonds, amid concerns about a possible recession and the escalating U.S.-China trade war. Concerns over inflation in the United States were also fuelled by these events.
According to data from LSEG Lipper, a net total of $25.71 billion was pulled out of global bond funds during the week, marking the highest weekly amount since April 1, 2020. The selling of U.S. Treasuries intensified after President Donald Trump increased tariffs on Chinese imports, causing worries that China might retaliate by raising its own tariffs.
The 10-year U.S. treasury yield rose by 45.5 basis points to 4.45% during the week, recording the largest increase in a week since November 2001. Analysts noted that the selling of U.S. bonds reflects a change in global confidence, as even traditionally stable Treasuries are facing pressure due to growing geopolitical tensions and doubts about U.S. financial supremacy.
Investors withdrew a net total of $15.64 billion from U.S. bond funds in that week, the highest weekly outflow in over 27 months. European funds saw outflows of $12.72 billion, while Asian funds received about $289 million in net inflows.
High-yield bond funds and loan participation funds faced significant selling pressure, with investors offloading $15.92 billion and $6.69 billion from these funds, respectively. Money market funds, considered a safe haven, attracted net inflows for the second consecutive week, amounting to $25.8 billion.
There was also a withdrawal of $10.7 billion from global equity funds due to sharp market fluctuations. Sectoral equity funds, particularly financials, healthcare, and tech, reported significant weekly outflows of $3.23 billion, $1.21 billion, and $867 million, respectively.
On the other hand, gold and precious metals funds experienced net inflows of $1.03 billion, marking their ninth consecutive week of gains. Among emerging market funds, both equity and bond funds observed their largest weekly outflows in over four months, with $4.9 billion and $3.6 billion withdrawn, respectively.