LONDON (Reuters) - Global investors remained risk-shy over the past week, pulling $5.8 billion from equity funds - the sixth straight weekly outflow - while pumping more money into bonds and precious metals, Bank of America Merrill Lynch (NYSE:BAC) (BAML) said on Friday.
Its fund flow report showed investors making for the safety of bond funds, which have now taken new money for 11 of the past 12 weeks.
Such funds received $2.8 billion over the week while precious metals - a category which includes gold - took in $1.8 billion, having received inflows in 18 of the last 19 weeks.
High-grade bonds received $1.5 billion while municipal debt funds had their 35th week of inflows with $1.3 billion. Money markets lost $1.2 billion.
The data pertains to a week when a number of Fed speakers indicated an interest rate hike was back on the agenda after a raft of relatively strong economic data and minutes from the last policy meeting released on Wednesday cemented those expectations.
Markets are pricing in a 32 percent chance of a rate hike in June, according to the CME FedWatch tool, up from 15 percent on Tuesday, since when the dollar has soared to six-week highs against other developed currencies (DXY). World stocks are at two-month lows and U.S. 10-year Treasury yields touched three-week highs.
Emerging assets have taken a dive too and BAML said emerging debt funds had seen their first outflows in 13 weeks, shedding $38 million. Emerging equities lost a far bigger $1.6 billion - their third straight week of outflows, the data showed.
BAML noted the Fed was potentially turning hawkish at a time when European, Japanese and Chinese central banks had signaled no more stimulus was forthcoming in the near future; those factors, it said, could be setting up a "summer of shocks".
"No profits, no policy stimulus and less bearish positioning ... we remain risk-cautious, buyers of gold and volatility on dips," the bank added.
U.S. equity funds fared the worst, shedding $4.9 billion. BAML said private clients were selling "ZIRP winners and strong-dollar plays", a reference to assets that benefited from near-zero U.S. interest rates.
European equities have now lost money for 15 weeks in a row but the past week's $1.1 billion outflow was the smallest in six weeks.