Global money market funds see huge demand for a seventh straight week

(Reuters) – Global investors were big buyers in money market funds for a seventh straight period in the week to April 12 after a strong U.S. jobs report heightened expectations that the U.S. Federal Reserve would raise interest rates in May.

Funds in the global money market drew a net $40.83 billion worth of inflows compared with a net $61.12 billion worth of purchases in the previous week, data from Refinitiv Lipper showed.

GRAPHIC: Fund flows: Global equities, bonds and money markets, https://www.reuters.com/graphics/GLOBAL-FLOWS/GLOBAL-FLOWS/gdpzqmloqvw/chart.png

Money market funds continue “to benefit from high U.S. real rates that forces deposits out of the banking system,” brokerage Jefferies said in a note to clients.

If the fed funds rate is discounted by core personal consumption expenditure (PCE) inflation, the real interest rate is currently a positive 0.275%.

The yield on the 3-month U.S. Treasury bill, in which money market funds invest the most, surged to near a 16-year high of 5.175% on Thursday.

Global equity funds, meanwhile, obtained $545 million, marking their first weekly inflow in three weeks.

Investors purchased communication services and financial sector funds of $974 million and $664 million, respectively, while selling a net $845 million worth of healthcare funds.

Global bond funds saw inflows dipping to $3.43 billion in the week from $16.45 billion worth of net buying a week ago.

Inflows in government bond funds slipped to a nine-week low of $2.33 billion, while high-yield funds faced outflows of $172 million. Global short- and medium-term bond funds received $1.57 billion, the biggest inflow in five weeks.

Among commodities, investors purchased $402 million of precious metal funds in their fifth consecutive week of net buying, while disposing of a net $147 million worth of energy funds.

Data for 23,942 emerging market funds showed equity funds received a third weekly inflow, worth $227 million, while bond funds had $913 million worth of outflows after two weekly net purchases in a row.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Tom Hogue)