| NEW YORK, Sept 28
NEW YORK, Sept 28 Some of the sugar high from
attempts by central bankers to give a jolt to the global economy
may be fading.
Over the past week, investors stashed more money into bond
funds and sharply cut back on the amount of new money committed
to stock funds amid renewed concerns about the Spanish debt
crisis, data from EPFR Global showed on Friday.
On Thursday, the Spanish government said it would cut
spending as part of a tough 2013 budget and left the door open
for a European bailout package.
Bond funds worldwide raked in $7.6 billion in new money in
the week ended Sept. 26, the most taken in by those funds in 20
weeks. U.S. bond funds accounted for more than half of that new
money, taking in $4.58 billion.
The big move into bonds may be an indication that some of
the initial glow from the Federal Reserve's decision to buy $40
billion in mortgage securities each month is starting to wear
Investors also may have been seeking safety, amid violent
anti-austerity protests in Spain and continuing uncertainty over
how the euro zone nation would address its debt crisis.
In the immediate aftermath of the Fed's announcement,
investors worldwide jumped into stocks, junk bonds, emerging
markets and other higher yielding assets in a search for higher
In the most recent period surveyed by EPFR, investors didn't
abandon stocks, but the amount of new money flowing into equity
funds fell sharply. EPFR reports that global stock funds took in
$1.88 billion compared to $17 billion in the prior reporting
Alan Gayle, senior investment strategist at Ridgeworth
Investments, said the renewed concerns about Spain's debt woes
had a negative effect on investors and led many to seek safety
U.S. stock funds saw $446 million in redemptions in the past
week, after taking in $7.5 billion in new money during the
Junk bond funds, which have garnered new money from
investors for 16 straight weeks, took in $1.59 billion in the
most recent period. Meanwhile, safe-haven U.S. government debt
attracted a meager $5 million in net inflows.
"There is still a high amount of confidence in the U.S.
high-yield market," said Gayle, while "there's a lot of
frustration with the low level of Treasury yields," he added.
The yield on the benchmark 10-year U.S. Treasury note
fell to 1.64 percent in Friday intraday trading.
Overall, the period surveyed by EPFR was a rough one for
stocks, with the benchmark S&P 500 index falling
It wasn't just Spain that gave investors some jitters, as
recent manufacturing data for the euro zone and China also
showed continued contraction. And a survey showing that German
business sentiment dipped for the fifth consecutive month in
September also weighed on stocks.
Robert Francello, head of equity trading for Apex Capital in
San Francisco, said risk assets still remain "in vogue." But he
said U.S. stock funds will need stronger economic data to
increase their intake of new money.
Funds that hold gold were a bigger winner in the week, an
indication that some investors are worrying that all actions by
central bankers could lead to inflation. Funds that target gold
and precious metals took in $1.4 billion.
The "worldwide currency debasement" that investors are
seeing as a result of central bank stimulus continues to make
gold funds appealing, said Francello.