NEW YORK, June 6 Reuters Emerging markets attracted foreign portfolio inflows for a seventh straight month in May thanks to investors pouring money into bonds, but persistently high U.S. interest rates are dimming the outlook, a report from a banking trade group showed.

The Institute of International Finance IIF said net nonresident portfolio flows into emerging markets came in at 5.5 billion in May compared to a revised 8.2 billion inflow in April, IIF data show.

The gains came as inflows into fixed income, at 11.5 billion, more than offset outflows of 6.0 billion from stocks with both China and exChina suffering.

Notwithstanding the seven monthlong monthly streak of inflows, we see a diminishing trend on the level of flows, mainly attributed to the perspective of a 39;higher for longer39; Federal Reserve rate and greater volatility on markets, according to IIF economist Jonathan Fortun.

U.S. inflation has remained sticky, but the U.S. economy also grew more slowly in the first quarter than previously estimated, rekindling expectations for two 25basis point rate cuts from the Fed before the yearend. Yet a Reuters poll also showed over oneinfour participants still think the Fed could opt for only one cut this year or none at all.

June didn39;t start well for some of the largest emerging markets as India, Mexico and South Africa saw spikes in volatility and selloffs across various asset classes as unexpected electoral results sent markets reeling.

Chinese equities…