Global money market funds see massive inflows in the week to May 26-Lipper

The front facade of the New York Stock Exchange (NYSE) is seen in New York, U.S., February 16, 2021. REUTERS/Brendan McDermid/File Photo

May 28 (Reuters) - Global money market funds saw huge inflows in the week ended May 26, Refinitiv data showed, amid caution that quickening inflation could alter the direction of U.S. monetary policy and shake up asset markets.

According to Refinitiv data, money market funds received an inflow of $53.2 billion, the highest in four weeks.

The higher inflows came as investors were watchful ahead of the report on core personal consumption expenditures to be released on Friday.

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Forecasters expect that prices for personal consumption goods excluding food and energy rose at a 2.9% annual rate in April, which would be the highest reading since June 1993, and beyond the Fed's 2% inflation target.

Various Fed officials have said they expect a pop in inflation to be temporary, and signalled policy will remain ultra-loose for some time, but markets are on edge.

However, that didn't deter the inflows into equity markets.

According to the data, global equity funds attracted inflows of $8.84 billion, a 46% increase over the previous week, as stocks rallied somewhat, after U.S. Federal Reserve officials reaffirmed a dovish monetary policy stance. read more

U.S. equity funds received $2.87 billion, while European equity funds and Asian equity funds obtained $2.47 billion and $1 billion, respectively.

Data showing Eurozone's business growth accelerating at its fastest pace in over three years in May also boosted sentiment. read more

Among equity sector funds, tech funds attracted inflows worth $546 million after three straight weeks of outflows, while financial sector funds faced their first outflow in 16 weeks, hit by a decline in bond yields.

Meanwhile, global bond funds also received inflows worth $8.25 billion, a 26% increase over previous week.

Among commodities, precious metal funds saw net purchases worth $1.37 billion, the biggest in 16 weeks, as gold prices surged to a 4-1/2-month high this week.

An analysis of 23,865 emerging-market funds showed equity funds had net outflows worth $463 million, while bond funds had inflows worth $420 million after outflows in the previous week.

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Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kim Coghill

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