Global Equity Funds Face Demand Drop as US Treasury Yields Rise

Global equity funds witnessed a sharp decline in demand during the week through January 15, 2025, as US Treasury yields rose following a robust jobs report. According to LSEG Lipper data, net purchases of global equity funds fell to $37.79 million, the smallest weekly buying since December 18, 2024 (Reuters, 2025). This decrease in demand can be attributed to several factors, including increased appeal of bonds, reduced appetite for risk, and potential for lower equity fund performance.



The benchmark 10-year yield climbed to 4.805%, its highest level since November 2023, following the jobs report. This increase in yields made bonds more attractive, leading investors to shift their funds from equity to bond funds. Global bond funds attracted $8.88 billion during the same week, a sharp decline from the previous week's $19.67 billion (Reuters, 2025). This shift in investor preferences can be seen in the following table:

The strong jobs report and falling unemployment rate led investors to believe that the Federal Reserve may have finished cutting rates, reducing the appeal of equity funds. Additionally, the moderation in inflation expectations may have contributed to the decline in demand for equity funds. Investor sentiment also played a role in the shift towards bond funds, as investors became more risk-averse and sought safer investments.

Geopolitical uncertainty, such as the ongoing war in Ukraine and trade conflicts, can also contribute to investor uncertainty and risk aversion, leading them to shift their funds from equity to bond funds. This shift in investor preferences can be seen in the following chart:

In conclusion, the rise in US Treasury yields has led to a decline in demand for global equity funds, as investors shift their funds towards bond funds in search of safer investments. This shift in investor preferences can be attributed to several factors, including increased appeal of bonds, reduced appetite for risk, and potential for lower equity fund performance. As the global economy continues to evolve, investors will need to stay informed about the factors influencing demand for equity and bond funds to make informed investment decisions.

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