Funds are flowing into the world bond fund, driven by speculation of a US interest rate cut and tension in the Middle East.

September 2, 2024, 12:44 PM GMT+9 (excerpt).

According to data from LSEG, a net inflow of $17.69 billion has flowed into the world bond fund during the week until August 28th. This inflow amount is at a high level not seen in 6 weeks, driven by speculation of a September interest rate cut by the Federal Reserve (FRB) and escalating tensions in the Middle East.

Following the suggestion of an early interest rate cut by Fed Chairman Powell, the yield on the US 2-year bond, reflecting interest rate expectations, decreased by 15.3 basis points (bp) this week.
US bond funds saw an inflow of $9.58 billion, reaching a six-week high. European and Asian funds also experienced inflows of $6.92 billion and $680 million, respectively.
Government bond funds saw an inflow of $5.42 billion, reaching a high level not seen since October 2023. Dollar-denominated short-term government bond funds saw an inflow of $4.99 billion, reaching a high level not seen since mid-March 2023.
High-yield bond funds also saw a two-week consecutive inflow of $2.73 billion.

The global money market fund had an inflow of approximately $8.18 billion, marking the fourth consecutive week of inflow.