January 30, 2019 / 5:57 PM / 19 days ago

TABLE-Investors flood U.S. bond funds with cash for 3rd straight week -ICI

    By Trevor Hunnicutt
    NEW YORK, Jan 30 (Reuters) - U.S. fund investors piled into
bonds for a third consecutive week, marking their best showing
since October, as expectations for easy monetary policy boosted
demand for debt, Investment Company Institute (ICI) data showed
on Wednesday.
    Bond mutual funds and exchange-traded funds (ETFs) based in
the United States netted $6.8 billion, the trade group said. The
week marks the first time since October that the funds have
pulled in cash for at least three weeks running.
    Federal Reserve Chairman Jerome Powell and other U.S.
central bank officials have made it clear in recent weeks that
they are ready to stop raising interest rates and tightening
lending conditions, a salve to investors in
interest-rate-sensitive assets.
    "There has been good bond fund demand," said Joe Becker,
portfolio strategist at Milliman Inc's Financial Risk Management
Group in Chicago. "With the Fed having hinted on holding on
future rate hikes, that lends a sense of stability to markets."
    Demand during the week was strong for a variety of
"fixed-income" funds, including products focused on
mortgage-backed securities, emerging market debt and long
"duration" Treasuries, earlier data from the Lipper research
service showed. Each of those bond categories is particularly
sensitive to higher rates.
    Investors showed less interest in stocks in the latest week
as only $1.5 billion moved into U.S.-based equity funds,
according to the ICI.
    "Risk appetite has certainly been dialed back," said Becker,
noting the volatile moves in U.S. stock indexes at the end of
2018. "The amount of equity exposure has been lower in 2019."
    The following table shows estimated ICI flows for mutual
funds and ETFs (all figures in millions of dollars):
                  1/23    1/16     1/9       1/2    12/26/18
 Equity          1,485  -2,783  11,326   -11,294     -21,078
      Domestic    -571  -4,931   6,630    -6,260     -11,747
      World      2,056   2,148   4,696    -5,033      -9,331
 Hybrid            355      16      11    -5,421      -8,268
 Bond            6,803   9,327   6,300   -14,176      -9,321
      Taxable    5,372   7,633   4,350   -14,073     -10,234
      Municipal  1,432   1,694   1,950      -103         913
 Commodity         584    -213     711       478         707
 Total           9,228   6,347  18,348   -30,412     -37,960
 (Reporting by Trevor Hunnicutt, editing by G Crosse)
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