U.S. bond funds suffered sharp outflows in the week to June 15 as rising inflation levels raised the odds of an acceleration in interest rate hikes by the Federal Reserve and sparked fears of a recession.
According to data from Refinitiv Lipper, investors dumped $18.73 billion worth of bond funds, the largest weekly net sale since March 18, 2020.
Data from last week showed that consumer prices in the United States accelerated faster than expected in May, driving the largest annual increase in nearly 40 and a half years.
The Federal Reserve on Wednesday approved a 75 basis point interest rate hike, its largest key rate hike since 1994, to stem a spike in inflation that U.S. central bank officials say could erode public confidence in their power.
US investors unloaded municipal bond funds worth $5.93 billion and taxable bond funds worth $12.94 billion.
They left high-yield bond funds, general national taxable fixed income funds and short/intermediate investment grade funds worth $5.87 billion, $5.41 billion and 4 .74 billion, respectively.
U.S. equity funds also saw outflows worth $21.62 billion, the biggest weekly net selloff since Dec. 15.
Investors sold US large- and mid-cap funds for $10.26 billion and $591 million, respectively, but small-cap funds got $2.02 billion in inflows.
US growth funds saw $7.95 billion in withdrawals in a 10th consecutive weekly outflow, while value funds suffered a net sale of $6.02 billion.
Among sector funds, financials, metals and mining, and technology saw outflows of $989 million, $224 million, and $144 million, respectively, but utilities attracted purchases of $249 million.
Meanwhile, investors withdrew $8.94 billion from money market funds after buying $24.96 billion the previous week.
Source: Reuters (report by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; editing by Amy Caren Daniel)