(Reuters) – Global bond funds saw their largest weekly outflow in over five years in the week to April 9, as investors pulled back even from traditionally safer bonds amid recession fears and an escalating U.S.-China trade war that are stoking concerns over inflation in the United States.
According to LSEG Lipper data, investors withdrew a net $25.71 billion from global bond funds during the week, the biggest amount for a week since April 1, 2020.
U.S. Treasuries saw heavy selling this week after President Donald Trump escalated the trade war with China, lifting tariffs on Chinese imports on Wednesday to an effective rate of 145% and fuelling concerns that Beijing could raise its own duties. China did take that step on Friday, hiking its tariffs on U.S. imports to 125%.
The benchmark 10-year U.S. treasury yield has so far increased about 45.5 basis points to 4.45% this week, the biggest increase in a week since November 2001.
Some analysts said the selloff in U.S. bonds signals a shift in global confidence, with Treasuries, long seen as the bedrock of the financial system, coming under strain from rising geopolitical tensions and doubts over U.S. financial dominance.
By region, investors pulled a net $15.64 billion from U.S. bond funds in the week to April 9, logging the biggest weekly net sales in over 27 months. Investors also ditched $12.72 billion worth of European funds, while Asian funds saw about $289 million worth of net inflows.
The high-yield bond funds and loan participation funds saw intense selling pressure as investors divested these funds to the tune of $15.92 billion and $6.69 billion respectively during the week.
Safe-haven money market funds saw a second straight week of net inflows, drawing in $25.8 billion.
Investors also pulled $10.7 billion from global equity funds amid sharp market volatility.
Sectoral equity funds posted record weekly outflows, led by financials, healthcare and tech, which saw net redemptions of $3.23 billion, $1.21 billion and $867 million, respectively.
At the same time, gold and precious metals funds saw net inflows of $1.03 billion, marking their ninth straight week of gains.
Among emerging market funds, equity and bond funds logged their biggest weekly outflows in over four months, at $4.9 billion and $3.6 billion, respectively.
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Frances Kerry)
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