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."
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