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Investors scrambled into safer U.S.-based money-market funds,
which attracted $64.66 billion in the week ended Wednesday, the
fifth largest weekly inflow on record since 1992, Lipper said.
Late Sunday, China let the yuan breach the key 7-per-dollar
level for the first time in more than a decade and announced it
was stopping its purchases of U.S. agricultural products,
halting a global rally which had pushed benchmark indexes in the
United States and China up more than 20% for the year to date.
It was the latest salvo in a brewing trade-turned-currency war
between the world's two largest economies.
"Lower rates aren’t good for money market funds, but the flows
this week represented a flight to safety," said Tom Roseen, head
of research services at Lipper. "Investors were just looking for
a good place to hide."
Roseen said there were "significant outflows" for equity
exchange-traded funds (ETFs) this week at -$22 billion, marking
their second-largest weekly outflows on record since 1996.
"Interestingly, despite the 10-year Treasury yield closing at
1.71% yesterday - its lowest closing value since November 4,
2016 - authorized participants and ETF investors were net
redeemers of taxable bond ETFs at negative $5.7 billion, with
the second-largest net redemption occurring in our
government-Treasury macro-group at negative $1.6 billion,"
Roseen said.
"Keep in mind that normally there is an inverse relationship
between yield and price. The average government-Treasury ETF
posted a 1.69% return for the fund-flows week ended August 7,
2019."
(Reporting by Jennifer Ablan; editing by Diane Craft and Susan
Thomas)
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