Reuters reported on Friday (23rd) that investors, ahead of the US Federal Reserve’s interest rate decision, are starting to tread carefully on expectations that the Federal Reserve will raise interest rates further to curb inflation, according to Refinitiv Lipper data. out of global bond and stock funds, with total net withdrawals of $7.32 billion in global bond funds, the largest weekly net selloff since August 31.
In addition, global short- and medium-term bond funds recorded their biggest weekly net outflows in 11 weeks, with total net outflows of US$4.98 billion, while high-yield bond funds also recorded net outflows of US$3.29 billion.
Meanwhile, global equity funds posted their fifth straight week of net selling to $1.86 billion. Among them, financial and consumer staples stocks lost $1.55 billion and $687 million, respectively, but utility and technology stocks gained about $300 million.
Bimal Patel, senior fund manager at Canada Life Asset Management, said that while timing is difficult, bond yields will peak sooner or later, with the US federal funds rate expected to end around March to a month June 2023.
Energy, financials and materials stocks remain attractively valued relative to the rest of the US stock market, said Eugene Barbaneagra, portfolio manager at SEI. These companies have low P/E ratios and will be the beneficiaries of a long-term inflationary environment and rising interest rates.
On the other hand, investors favored safer money market funds, attracting $28.23 billion, the biggest weekly inflow since July 6.
On the commodity front, data showed investors disliked precious metals for the 13th week in a row, with a net disposal of $474 million, and investors also pulled $60 million from energy funds.
In emerging markets, analysis showed investors sold $2.39 billion worth of equity funds, the 10th consecutive week of outflows, while selling $2.78 billion worth of bond funds.
The Fed raised its benchmark interest rate by 3 yards (75 basis points) on Wednesday, marking the third major rate hike in a row. Policymakers predict interest rates will reach 4.4% this year, 4 yards (100 basis points) higher than the Fed’s forecast three months ago. ).