Investors Pour Money Into Bond Funds at a Record Pace: About $455 billion is expected to flow into bond funds in 2019, a sign investors remain cautious

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Investors Pour Money Into Bond Funds at a Record Pace

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Mutual funds and exchange-traded funds tracking bonds posted $12.1 billion of inflows for the week ended July 17, the 28th consecutive week of inflows. That brings the total so far this year to $254 billion, on pace for a record $455 billion on an annualized basis in 2019, according to a Bank of America Merrill Lynch analysis of EPFR Global data. That compares with $1.7 trillion in bond inflows over the past 10 years, the bank said.

Investors are parsing mixed signals on where the economy is headed. Dimmer expectations for global growth have pushed S&P 500 companies to cut their forecasts, pushing the estimated earnings-growth rate for the year to 1.7%, down from expectations of 3% in late March, according to FactSet.

The move into bonds has come even as U.S. stocks have marched to all-time highs. One reason: Corporations have helped support the stock market over the past decade via buybacks, which have contributed in part to a rise in asset prices, Mr. Woodard said.

The potential for lower borrowing costs in the near term could prove to be advantageous for stocks. The last five times the Federal Reserve began cutting interest rates outside of recessions—including 1984, 1987, 1989, 1995 and 1998—the S&P 500 rose an average of 11% over the subsequent six months and 16% over the next year, according to LPL Financial.

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