By Sam Forgione
NEW YORK (Reuters) – Investors worldwide poured $2.1 billion into high-yield bond funds in the latest week after a lackluster U.S employment report suggested the Federal Reserve would wait longer before hiking rates, data from a Bank of America Merrill Lynch Global Research report showed on Friday.
The inflows, which came over the weekly period ended April 8, were the biggest in five weeks.
Bond funds overall attracted $7.2 billion, marking a 14th week of new demand, according to the report, which also cited data from fund-tracker EPFR Global.
Funds that specialize in emerging market bonds attracted $400 million to mark their third straight week of inflows.
Riskier bonds were not the only ones in vogue. Investors also committed $1.1 billion to funds that mainly hold safe-haven U.S. Treasuries, marking their fifth week of inflows.
Labor Department data released April 3 showed employers added just 126,000 jobs in March, the smallest monthly increase in more than a year.
“Any softness in the economy is taken as a sign that the Fed will wait until the end of 2015 rather than the middle of 2015” before raising rates, said Martin Fridson, chief investment officer at Lehmann Livian Fridson Advisors LLC.
A hike in rates is expected to hurt bond prices.
Allianz chief economic adviser Mohamed El-Erian said on Thursday: “Notwithstanding last Friday’s employment report, I think they will start hiking rates in September.” [ID: nL2N0X61VN]
The Barclays U.S. Corporate High Yield Index rallied 0.7 percent over the reporting period.
Stock funds worldwide attracted just $200 million in new cash, a meager amount, but a rebound from roughly $15 billion in investor withdrawals over the prior two weeks combined.
Investors again favored European stocks over U.S. shares. European stock funds attracted a sizable $3.9 billion to mark a 13th week of inflows, while funds that hold U.S. stocks posted $5.5 billion in outflows.
Investors have pulled cash out of U.S.-focused stock funds for seven of the past eight weeks, according to the report.
While the latest outflows were hefty, they were just a fraction of the prior week’s huge $14.9 billion in withdrawals.
Funds that specialize in Chinese stocks posted $2.3 billion in outflows for an eighth week of withdrawals, despite being the best-performing global market over the past twelve months, according to the report.
The Shanghai Composite index has risen nearly 25 percent this year as Chinese authorities steadily ease policy in a bid to prevent a sharp economic slowdown.
(Editing by Jennifer Ablan and Bernadette Baum)