By John Parry
NEW YORK, Nov 1 (Reuters) - A slowing U.S. economy is turning some global investors away from stocks to seek a safe haven in Treasury bonds and other high quality sovereign bonds, at least in the short term.
Long term investors have been hesitant to commit large sums to stocks over the past two months, even though the U.S. stockmarket's Dow Jones Industrial Average and other developed country equity markets have been hitting new highs, according to analysts at custodian banks who track global cross asset market flows.
In the last few weeks, net flows into global equity funds have fallen well below their averages year-to-date.
By contrast, net inflows into high quality global government bond funds have surged to double their recent averages, according to Emerging Portfolio Fund Research, a fund tracking company in Boston.
"Very patchy economic data, with a clear deceleration of growth in the United States (has) increased aversion to risk a little bit and driven outflows from equities into bonds," said Brad Durham, a managing director of Emerging Portfolio Fund Research, based in Boston.
Even though U.S. companies whose stocks are in the benchmark S&P500 index have seen earnings growth of around 17 percent in the third quarter, investors are becoming concerned about the outlook for future earnings, analysts said.
U.S. economic growth slowed to 1.6 percent on an annualized basis in the third quarter, from 2.6 percent in the prior quarter, the U.S. Commerce Department reported last Friday.
Recent weak U.S. economic data has helped to spur more buying of U.S. Treasury bonds, pushing benchmark yields down to eight month lows this week. Continued...
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