Global markets have recently regained some of their footing, with bond yields declining and most stock markets clawing back some losses. The FTSE All World Index has gained 2.7 per cent since Tuesday.
Fund managers stress that the Fed is still buying billions of dollars’ worth of bonds for months to come, and point out that actual interest rate increases are far away.
But some asset managers are concerned that if outflows continue it could force some to sell positions once more and trigger another, deeper leg in the fixed income rout, particularly during the illiquid summer months.
“The summer is hot and shallow. If people capitulate then it will not be nice,” warns one senior asset manager.
Equity funds failed to benefit from the move out of fixed income, with redemptions hitting $13bn in the week ending June 26.
Japan was the only place to see net equity inflows in the past week, but Japanese investors, big holders of US Treasury debt, dumped a net $12bn of foreign bonds last week, their biggest sale in 14 months. - FT: Central banks sell record sums of US debt
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