U.S. bond funds record smallest weekly inflow in 2.5 months due to inflation fears, Lipper says



Global indices are displayed on a screen in the trading floor of the New York Stock Exchange (NYSE) in Manhattan, New York, United States on August 19, 2021. REUTERS / Andrew Kelly / File Photo

October 8 (Reuters) – Cash inflows into U.S. bond funds fell in the week to October 6 as a surge in energy prices led to inflationary pressures, with concerns over the cap on US debt capping inflows for shorter-term bonds.

Investors bought $ 727 million net of U.S. bond funds in the week to October 6, their smallest weekly inflow since July 21, according to Lipper data.

Yields on shorter-term bonds climbed over the week amid fears that the US Treasury might be strapped for cash, which could lead to a default without an increase or suspension of the debt ceiling.

However, the U.S. Senate on Thursday approved legislation to temporarily raise the federal government’s debt limit to $ 28.4 trillion and avoid the risk of a historic default this month. Read more

Cash flow to U.S. equity bonds and money market funds

U.S. government bond funds saw a second straight week of outflows, worth $ 483 million, while municipal debt funds attracted $ 988 million in net purchases.

Inflation-protected bond funds also received $ 1.28 billion, the highest inflow since late July.

Flows in US bond funds

US equity funds received inflows of $ 2.85 billion, after two consecutive weeks of outflows.

Investors bought $ 1.17 billion worth of value equity funds after two straight weeks of selling, while growth funds faced cash outflows for the third consecutive week, worth $ 882 million.

Among sector funds, technology and financials drew $ 785 million and $ 502 million, respectively, while health funds marked a second consecutive outflow worth $ 1.93 billion.

Flows in US Equity Sector Funds
Funds flowing to US growth and value funds

Meanwhile, US money market funds faced the first net sale in three weeks, for a net amount of $ 14.03 billion.

Report by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Paul Simao

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