Global bond funds see weekly outflows on inflation worries

© Reuters. FILE PHOTO: U.S. dollar banknotes are displayed in this illustration taken, February 14, 2022. REUTERS/Dado Ruvic

(Reuters) - Global investors resumed selling bond funds in the week to June 8, after purchasing them in the previous week, as strong employment numbers in the United States and soaring European inflation rekindled fears of aggressive monetary tightening by major central banks.

Investors pulled $9.46 billion out of global bond funds in the week, after purchases of $7.2 billion in the previous week-the only weekly inflow since March 30, Refinitiv Lipper data showed.

Graphic: Fund flows: Global equities bonds and money market - https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrnxjmpm/Fund%20flows-%20Global%20equities%20bonds%20and%20money%20market.jpg

Investors expect the Federal Reserve to raise interest rates by 50 basis points next week, especially if U.S. consumer price data on Friday confirms elevated inflation.

Inflation data on Friday is expected to show that consumer prices rose 0.7% in May.

U.S. and European bond funds had net selling of $7.61 billion and $2.66 billion, respectively, but Asian funds had marginal purchases of about $90 million.

Investors sold $3.18 billion of global government bond funds after six straight weeks of net buying, while short- and medium-term bond funds had outflows of $5.2 billion, the biggest in four weeks.

Graphic: Global bond fund flows in the week ended June 8- https://fingfx.thomsonreuters.com/gfx/mkt/mypmnwzjzvr/Global%20bond%20fund%20flows%20in%20the%20week%20ended%20June%208.jpg

Meanwhile, money market funds attracted a net $56.57 billion, the biggest inflow since Oct. 27.

Global equity funds secured money for a third straight week, worth $1.87 billion, but net buying receded 82% from the previous week.

Among sector funds, utilities and energy funds lured inflows worth $498 million and $332 million respectively, but tech and consumer staples saw outgo of $785 million and $571 million respectively.

Graphic: Fund flows: Global equity sector funds - https://fingfx.thomsonreuters.com/gfx/mkt/zjpqkgrazpx/Fund%20flows-%20Global%20equity%20sector%20funds.jpg

Data for commodity funds showed investors withdrew $492 billion out of gold and precious metal funds in a second weekly net selling, but energy funds had small purchases, worth $87 million.

An analysis of 24,288 emerging market funds showed bond funds received a net $108 million after eight straight weeks of outflow, but investors sold equity funds of $791 million.

Graphic: Fund flows: EM equities and bonds - https://fingfx.thomsonreuters.com/gfx/mkt/xmpjoxajmvr/Fund%20flows-%20EM%20equities%20and%20bonds.jpg