NEW YORK (Reuters) - U.S. fund investors downgraded their expectations for the domestic economy and snapped up bonds during the latest week, dropping the most cash into debt funds in more than 23 months, Investment Company Institute data showed on Wednesday.
Bond mutual funds and exchange-traded funds in the United States pulled in $13.6 billion during their 24th consecutive week of inflows and posted their best result since June 2015, the trade group said.
Stock fund withdrawals were $7.7 billion during the week ended June 7, with $11.1 billion in domestic equity outflows offset a bit by funds focused on international shares taking in $3.4 billion.
The week ended June 7 came ahead of a British general election, the European Central Bank’s policy meeting and former FBI Director James Comey’s testimony before a Senate panel.
“There’s more concern, but it’s not general concern about risk, it’s more focused on the diminishing expectations for the Trump administration agenda,” said Kristina Hooper, global market strategist for Invesco Ltd (IVZ.N), in New York.
Hooper said Comey’s testimony offered further evidence that Congress is “distracted” and unlikely to pass market-friendly legislation of the scope initially expected.
“It’s almost like sand running through your finger watching the agenda come to fruition.”
The period measured by the ICI did not include the dramatic shift on Friday and Monday from technology stocks into banks and other sectors.
“If there was some sign that the economy was in trouble, I’d be worried,” said Ted Theodore, chief investment officer at TrimTabs Asset Management LLC in New York.
Theodore said investors are still scarred by the 2008 financial crisis and are ready to quickly sell an investment that stalls.
“You just have a generation of people who think the world is going to end.”
Reporting by Trevor Hunnicutt; editing by Diane Craft