US bond funds show outflows on Fed tightening expectations | Investment News

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(Reuters) – U.S. bond funds faced outflows for the first time in four weeks in the seven days to Jan. 12 on growing prospects that the U.S. Federal Reserve will begin to tighten policy with a rise in interest rates in March.

According to data from Refinitiv Lipper, investors unloaded $3.15 billion from US bond funds, marking the first weekly outflow since Dec. 15.

(Fund flows: US stocks, bonds and money market funds – https://fingfx.thomsonreuters.com/gfx/mkt/lbpgnjmalvq/Fund%20flows%20US%20equities%20bonds%20and%20money%20market%20funds.jpg )

Investors feared the Fed would be more aggressive in raising interest rates after interpreting the minutes from central banks’ December meeting as more hawkish. Goldman Sachs, JP Morgan and Deutsche Bank expect the Fed to hike rates four times this year.

US taxable bond funds saw net sales of $2.96 billion, the largest outflow in four weeks, while US municipal bond funds received just $7 million in inflows.

US short-to-intermediate investment grade funds and US mortgage funds saw outflows of $1.4 billion and $466 million respectively, while US loan participation funds and domestic taxable fixed income funds generals recorded inflows of approximately $1.8 billion each.

(Funds Flow: US Bond Funds – https://fingfx.thomsonreuters.com/gfx/mkt/zjvqkndbmvx/Fund%20flows%20US%20bond%20funds.jpg)

Meanwhile, inflation-protected funds saw their first weekly outflow in more than five months, even though they were just $10 million.

US equity funds attracted inflows of $7.99 billion, their smallest net purchase in four weeks.

Among sector funds, financials got $2.58 billion, the biggest weekly inflow since mid-February 2021. Industrials, technology and consumer staples also attracted $0.95 billion, respectively. , $0.88 billion and $0.81 billion.

(Fund Flows: US Equity Sector Funds – https://fingfx.thomsonreuters.com/gfx/mkt/egvbkjbdlpq/Fund%20flows%20US%20equity%20sector%20funds.jpg)

U.S. investors secured $2.8 billion in value funds in a fourth straight week of net buying, while growth funds saw outflows of $7.19 billion, the largest since December 15.

(Fund Flows: US Growth and Value Funds – https://fingfx.thomsonreuters.com/gfx/mkt/klvykqjwbvg/Fund%20flows%20US%20growth%20and%20value%20funds.jpg)

U.S. money market funds posted outflows of $28.4 billion in a second consecutive week of net sales.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Barbara Lewis and Jonathan Oatis)

Copyright 2022 Thomson Reuters.

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