US bond funds record outflows for fourth straight week

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(Reuters) – U.S. investors remained net sellers of bond funds for a fourth consecutive week on heightened expectations that the U.S. Federal Reserve will be more aggressive with its interest rate policy this year to tame inflation. According to data from Refinitiv, investors sold $4.5 billion worth of U.S. bond fund units, down a third from the previous week.

FILE PHOTO: A specialist trader works inside a booth on the floor of the New York Stock Exchange (NYSE) in New York, U.S., January 25, 2022. REUTERS/Brendan McDermid/File Photo

The two-year US Treasury yield, which generally moves in line with interest rate expectations, rose above 1.3% on Friday, its highest level since February 2020. US municipal debt funds recorded outflows valued at $1.79 billion, the largest since April 2020. Investors also sold short/mid US investment grade funds to the tune of $1.2 billion, but bought funds at general national taxable fixed income worth $2.53 billion. Meanwhile, US inflation-protected funds saw outflows of $1.7 billion, the largest in 22 months.

US equity funds also faced outflows worth $7.92 billion during the week.

Among sector funds, consumer discretionary, technology and financials funds had net sales of $1.32 billion, $1.12 billion and $231 million respectively, while consumer staples generated $707 million in net purchases.

U.S. money market funds saw outflows of $17.73 billion after attracting $25.47 billion in inflows the previous week.

Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Tomasz Janowski

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