Bond funds have $19.7 bln outflow so far in August-TrimTabs

NEW YORK Mon Aug 19, 2013 3:59pm EDT

NEW YORK Aug 19 (Reuters) - Investors have withdrawn $19.7 billion from bond mutual funds and exchange-traded funds so far in August as fears of a pullback in the Federal Reserve's stimulus continue to drive bond selling, data from research provider TrimTabs Investment Research showed on Monday.

The withdrawals from bond funds, which spanned the first 12 trading days of August, have already surpassed the $14.8 billion that was pulled out in all of July, TrimTabs said. Investors have taken $103.5 billion from bond funds since the start of June, the research provider said.

"We are concerned that the Fed is starting to lose control of the bond market, which is not good news for the stock market or the highly leveraged U.S. economy," the TrimTabs report said.

The yield on the 30-year Treasury bond jumped to 3.91 percent in intraday trading Monday, the highest level since August 2011. The yield on benchmark 10-year Treasury notes rose as high as 2.90 percent or 128 basis points higher than the yield on May 2. As yields rise, prices fall.

The Fed is buying $85 billion in Treasuries and agency mortgages monthly in an effort to spur hiring and keep interest rates low. The purchases have been a major source of support for both bond and stock markets.

Fed Chairman Ben Bernanke triggered a selloff in the bond market when he told Congress on May 22 that the central bank could begin reducing its purchases this year if the U.S. economy looked strong enough.

Investors are turning their focus to the release of the minutes from the Fed's July meeting on Wednesday, which will be assessed for any hints of when the U.S. central bank plans to reduce its bond buying.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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