ETF Snapshot: Government bonds see outflows amid rising rate environment

Outflows of €449m this week

In the week ending 3 November, developed government bonds reversed three weeks of inflows, according to data from TrackInsight, following the first rate hike in a decade from the Bank of England.

Government bond ETFs witnessed outflows of €449m at the end of last month, following €1.8bn inflows over the three previous weeks. In what is typically seen as negative for government bonds, the Bank of England (BoE) raised interest rates by 25 basis points (bps) to 0.5% last week following "stronger than expected" UK economic growth. Furthermore, the European Central Bank (ECB) halved its bond-buying programme from €60bn to €30bn a month on 26 October, and the Federal Reserve has already begun hiking rates and reducing its €4.5trn balance sheet. By comparison, other fixed income a...