Global Bond Fund Outflows 2025: Record $25.7B Exit Amid Trade War, Recession Fears
Bond investors pulled a record $25.71 billion from global funds last week, marking the biggest outflow in years. Rising U.S.-China trade tensions and fears of a looming recession triggered the retreat. The impact was swift—U.S. 10-year Treasury yields spiked to 4.45%, unsettling investors worldwide.
What’s Driving the Bond Selloff?
According to LSEG Lipper fund flow data, the outflows occurred during the week ending April 4, 2025. This marks a sharp reversal from the cautious optimism seen earlier in the year. The sudden surge in outflows reflects deep concerns over:
- A renewed U.S.-China trade war, with fresh tariffs on key tech and energy sectors.
- Growing signs of a global slowdown, with weak factory output data in Europe and Asia.
- The Federal Reserve’s hawkish tone, hinting at a delayed rate cut cycle.
Money rushed out of global bond funds, especially those tied to long-term U.S. Treasuries. Investors are now shifting their bets—away from government debt and into money market funds and gold, traditionally seen as safer options.
“The scale of the outflows reflects how quickly sentiment can sour when macro risks resurface,” said a senior analyst at LSEG.
A Historical Parallel
To understand the gravity of these flows, it helps to look back. The only comparable event was the 2020 pandemic panic, when investors pulled billions from bond markets due to uncertainty. But even then, the weekly outflow peaked at $23.6 billion—less than what we’re seeing now.
This time, the outflow is not pandemic-driven. Instead, it’s rooted in policy uncertainty and geopolitical risk. Trade wars have a history of shaking markets. In 2018, similar tariff disputes also led to volatility in fixed-income assets.
Also Read: Gold Price Record High as Tariffs Hit 145% — Is the World Seeking Refuge from a Financial Storm?
Breakdown of the Data
Here’s how fund flows played out globally last week, as per LSEG Lipper:
- U.S. bond funds: $14.9B outflow
- European bond funds: $6.4B outflow
- Asian bond funds: $2.8B outflow
- Emerging markets: $1.6B outflow
At the same time, money market funds saw an inflow of over $10 billion, and gold-backed ETFs recorded a four-month high in net buys.
What Does This Mean for Investors?
If you’re holding bonds, this isn’t the time to panic—but it is time to reassess. Bond yields are rising, which could offer better entry points later. But for now, volatility may persist.
Also, watch how central banks respond. If rate cuts are pushed further into 2025, bond prices may face continued pressure.
You can also consider diversifying into short-term instruments, floating rate bonds, or commodity-linked assets until the dust settles.
Looking Ahead
The bond market may remain unstable unless there’s a clear resolution to trade tensions. Investors should monitor:
- Fed signals and inflation data
- U.S.-China trade talks
- Corporate earnings (especially from global exporters.
Also Read: Swiss Franc at a Decade High—But the Bigger Story Might Be the Dollar
