Global money market funds draw huge inflows on caution over potential tariffs

(Reuters) - Investors piled into global money market funds in the week through Jan. 8, spurred by concerns over potential tariff increases with the upcoming change in the U.S. administration and caution ahead of a critical jobs report that could reshape expectations for Federal Reserve rate cuts.

According to LSEG Lipper data, investors channelled $158.73 billion into global money market funds, their second largest weekly net purchase since April 2020.

U.S. President-elect Donald Trump, set to take office on January 20, has pledged to impose a 10% tariff on all global imports to the U.S. Additionally, he has threatened to implement a 25% tariff on imports from Canada and Mexico on his first day in office.

Global equity funds secured inflows for a third successive week, reaching a net $11.36 billion.

European equity funds received a net inflow of $8.7 billion, the largest in three weeks. Meanwhile, investors added a net $5.6 billion to Asian funds but withdrew a net $5.05 billion from U.S. funds during the same period.

Global sectoral equity funds witnessed the first weekly net purchase in five weeks, to the tune of $526.24 million.

Investors pumped $1.13 billion into the technology sector following five straight weeks of net selling. The communication services sector saw a net $413 million worth of purchases.

Global bond funds also saw significant activity, receiving $19.5 billion, the second inflow in the past four weeks. Government bond funds alone attracted $1.94 billion, their second influx in six weeks, and loan participation funds gathered $2.24 billion.



Meanwhile, commodity funds faced liquidations for the second week in a row, with investors withdrawing $293 million from gold and precious metals funds, taking profits after a substantial $14.32 billion in net purchases throughout 2024.

Emerging market funds showed mixed results. Bond funds broke a four-week selling streak with $2.38 billion in net inflows. Conversely, equity funds experienced substantial outflows, totaling $973 billion during the week.

Source: Investing.com