NEW YORK -- Investors are getting cold feet about fast-moving commodity markets, but a stampede into safe havens like sovereign debt is not likely as investors are not growing more risk averse overall.

Add in that some of the major central banks are raising benchmark interest rates — not a positive for bonds — and it's hardly an environment in which government debt will draw significant flows from other assets.

"We are still in very much a risk-seeking environment where investors have a preference for emerging markets over developed markets," said Brian Garvey, senior strategist with State Street Global Markets in Boston.

From a three-month peak above $64 per barrel in late December, crude oil traded in New York dropped to just below $50 in mid-January. Oil has rebounded near $60 now.

Copper prices have slipped some 15 percent since the start of the year on expectations that demand would slow with global economic growth. Since copper hit a record high of $8,800 last May, copper prices have tumbled nearly 40 percent.

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Such abrupt moves have cast the commodity bull market in doubt and made investors blink twice, damping demand for commodity funds in January. That is not yet stoking a sustained flight to safety into government bonds, which are a traditional refuge when investors fret about the global economy's prospects and start to shun riskier assets.

WHEN OIL SLIDES, BONDS RALLY

In the past, hints that global economic growth may slow and inflation pressures may ebb have helped long-dated bonds rally, while they have depressed commodity prices at the same time.

In the mid-1980s and the early 1990s, for instance, as oil prices fell, "bearish moves in oil became a very bullish influence on bond prices," said Gregory Weldon, CEO of Weldononline.com, a global macroeconomic market research company.

More recently, the Reuters/Jefferies CRB Index of commodity futures hit a record peak above 365 in May last year, the same month the 30-year Treasury bond's yield — which moves inversely to its price — hit a 1-1/2-year high. The CRB index then sold off as Treasuries rallied until November.

Data from Boston-based fund tracker Emerging Portfolio Fund Research, or EPFR, hints commodity funds are failing to attract new investors and may not draw the same tide of money in 2007 they did last year when oil and metals prices soared. Commodity funds had net outflows for two out of the first four weeks of January, after a year of steady inflows.

"Two of the first four weeks of outflows certainly gives one pause for thought about whether the tremendous inflows seen in 2006 will carry through, especially with oil prices coming off their historic highs," said Brad Durham, a managing director of EPFR, based in Boston.

RATE WORRIES

Yet the major global sovereign debt funds that the EPFR tracks are unlikely this year to match the strong $15.4 billion net inflows they tapped in 2006, against a backdrop of uncertainty about central banks' interest-rate moves, Durham said.

"With the Fed on hold, a pre-emptive strike (rate hike) by the Bank of England and Japan continuing to tighten, I wouldn't be calling for any continuing record-setting inflows this year for these (bond) funds," Durham said.

For now, investors are confident enough of global economic prospects to continue plowing money into stocks in a wide array of markets.

In the week ending February 1, global equity funds tracked by EPFR took in their strongest weekly inflow since the first quarter of 2006.

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