Bond rout marks November a watershed month for fund flows - BAML

The rout in world bond markets gathered pace in the past week, making November a watershed month for fund flows as bond funds chalked up their heaviest outflows in three and a half years, Bank of America Merrill Lynch said on Friday.

November also saw the largest redemption from precious metals funds in three and a half years and the biggest outflow from equity funds in two years, as investors adjusted to a world of rising yields, interest rates and inflation expectations.

The net inflow into equity funds was wholly down to flows into U.S. equity funds offsetting the largest outflow from Europe in 11 weeks, BAML said.

In the week to Nov. 30, bond fund outflows totalled $4.4 billion, resulting in the biggest five-week outflow since mid-2013, according to BAML, which also uses data from fund flows research house EPFR Global. 

Investors dumped bonds around the world in November as Donald Trump`s U.S. presidential win stoked bets on faster growth and inflation, hitting global bond markets with their biggest rout in more than 13 years.

BAML`s Global Broad Market Index fell 1.76% in November, its steepest %age drop since a 2.06% fall in July 2003. That translated into a dollar loss close to $2 trillion.

The 10-year U.S. Treasury yield rose 53 basis points in November, its biggest monthly rise since December 2009. 

Equity funds posted a net inflow of $1.2 billion in the week to Wednesday, driven by a $4.4 billion inflow into U.S. funds, the fourth consecutive weekly inflow. European equity funds posted an outflow of $2 billion.

Gold funds posted an outflow of $600 million, the third straight weekly outflow, BAML said. Gold fell 11 % in November, its biggest monthly fall since June 2013.