Recession Fears Trigger Massive U.S. Bond Fund Exodus

Amid escalating recession concerns and trade war strains, U.S. bond fund investors withdrew $15.64 billion by April 9. The significant selloff came amidst worries over U.S.-China tariff hikes. Despite this, U.S. Treasury funds and equity funds saw substantial inflows, against the backdrop of a volatile financial market.

Investors exited U.S. bond funds en masse in the week concluding April 9, as fears of an impending recession and an intensifying U.S.-China trade war triggered a broad market selloff. Data from LSEG Lipper revealed that a net $15.64 billion was withdrawn from U.S. bond funds, marking the most substantial outflow since December 21, 2022.

U.S. Treasuries faced significant selling pressure following President Donald Trump's decision to escalate the trade war, increasing tariffs on Chinese imports to an effective rate of 145%. This prompted concerns about retaliatory moves from Beijing, which, on Friday, raised tariffs on U.S. imports to 125%.

While general domestic taxable fixed-income funds, short-to-intermediate investment-grade funds, and loan participation funds recorded notable net sales, U.S. short-to-intermediate government and Treasury funds attracted $8.89 billion in inflows. Additionally, investors channeled $6.44 billion into U.S. equity funds, contrasting the $10.83 billion in net sales observed a week earlier.

(With inputs from agencies.)