Global inflation-linked bonds draw massive inflows in week to May 19 -Lipper

FILE PHOTO: A nearly empty trading floor is seen at the New York Stock Exchange (NYSE) in New York, U.S., May 22, 2020. REUTERS/Brendan McDermid/File Photo

(Reuters) - Global inflation-linked bonds continued to attract buyers in the week ended May 19, as investors protected themselves against rising consumer prices in the United States.

According to Refinitiv data, the bonds, the value of which is indexed to measures of inflation, attracted a net $1.92 billion, or about one-third of total global bond inflows.

Riskier high-yield bond funds posted their biggest net outflow in 10 weeks at $2.69 billion. (Graphic: Fund flows into global equities bonds and money markets, https://fingfx.thomsonreuters.com/gfx/mkt/xegvbdgmevq/Fund%20flows%20into%20global%20equities%20bonds%20and%20money%20markets.jpg) (Graphic: Global bond funds flows in the week ended May 19, https://fingfx.thomsonreuters.com/gfx/mkt/qzjvqblezpx/Global%20bond%20funds%20flows%20in%20the%20week%20ended%20May%2019.jpg)

Data released last week showed U.S. consumer prices unexpectedly rose by the most in nearly 12 years in April, triggering worries that the Federal Reserve may have to raise rates sooner than it currently expects.

Minutes of the Fed's most recent meeting published this week said "a number" of officials believed it might be appropriate to "begin discussing a plan for adjusting the pace of asset purchases" if the economic recovery holds up.

Heightened inflation worries also slowed flows into global equity funds, which received a net $5.1 billion, a drop of 63% from the previous week.

In particular, investors sold U.S and Chinese equity funds, pushing outflows to $5.43 billion and $$1.83 billion respectively. (Graphic: Global fund flows into equity sectors, https://fingfx.thomsonreuters.com/gfx/mkt/xklvywrzovg/Global%20fund%20flows%20into%20equity%20sectors.jpg)

Tech sector funds witnessed net outflows of $2.4 billion, the biggest since at least June 2019, while financials and mining funds received $1.6 billion and $750 million respectively.

Investors directed $793 million to precious metal funds, marking their biggest net buying in 15 weeks as gold prices surged above a four-month high in the week.]

Meanwhile, global money market funds attracted $7.94 billion, a 69% drop from the previous week. (Graphic: Fund flows into EM equities and bonds, https://fingfx.thomsonreuters.com/gfx/mkt/bdwpkwmampm/Fund%20flows%20into%20EM%20equities%20and%20bonds.jpg)

An analysis of 23,804 emerging-market funds showed equity funds faced net outflows worth $879 million, the biggest in eight months, while bond funds recorded outflows worth a net $878 million.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kirsten Donovan)

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