US bond funds see biggest weekly outflow in four weeks

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(Reuters) – U.S. bond funds saw a sharp rise in outflows in the week to May 11 on worries about rising inflation, cementing expectations of aggressive rate hikes from the Federal Reserve.

According to data from Refinitiv Lipper, US bond funds faced outflows for the 18th consecutive week, amounting to $10.42 billion, nearly double the $5.9 billion in disposals. of the previous week.

CHART – Fund flows: US stocks, bonds and money market funds

The benchmark 10-year US Treasury yield hit a 3.5-year high of 3.203% this week on fears of rising inflation levels.

Consumer prices in the United States rose 8.3% in April year-on-year, beating economists’ forecast of 8.1%, data showed on Wednesday.

Investors sold taxable U.S. bond funds worth $7.72 billion, an outflow about 95% larger than a week ago, while municipal funds suffered outflows from $2.76 billion.

Short/mid-size US investment-grade funds saw net sales of $7.28 billion in the largest weekly outflow since April 2020. However, short/mid-range US government and treasury funds attracted inflows of $2 .62 billion.

CHART: US bond funds https://fingfx.thomsonreuters.com/gfx/mkt/znpnemylovl/Fund%20flows%20US%20bond%20funds.jpg

Meanwhile, investors unloaded US equity funds worth $8.46 billion in a fifth straight weekly outing.

CHART: US Growth and Value Funds https://fingfx.thomsonreuters.com/gfx/mkt/movanoxwbpa/Fund%20flows%20US%20growth%20and%20value%20funds.jpg

Selling continued in U.S. growth funds for the seventh consecutive week, rising to $4.5 billion. Value funds also posted an outflow, worth $1.99 billion, after a week of inflows.

Among sector funds, financials, industrials, materials and technology lost $1.24 billion, $756 million, $677 million and $468 million in outflows, respectively.

CHART: US Equity Sector Fund https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgkrbapb/Fund%20flows%20US%20equity%20sector%20funds.jpg

Meanwhile, US money market funds posted net sales of around $7 billion in their first weekly outflow in three weeks.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kim Coghill)

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