US bond funds see cash outflows for 10th straight week | Investing news

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(Reuters) – US bond funds saw large outflows in the week ended March 16 as another strong reading of US inflation last week included expectations that the Federal Reserve will need to act quickly to contain rising prices.

US investors exited bond funds for the tenth straight week, selling $7.24 billion, compared with net sales of $7.8 billion the previous week, data from Refinitiv Lipper showed.

Graphic: Fund flows: US equities, bonds and money market funds https://fingfx.thomsonreuters.com/gfx/mkt/lgvdwargapo/Fund%20flows%20US%20equities%20bonds%20and%20money%20market%20funds.jpg

The Fed on Wednesday announced a quarter-point hike in US interest rates to near zero, signaling that it would hike rates more aggressively than expected to tame rising inflation after posting a firm inflation rate last week.

U.S. taxable bond funds lost $5.18 billion on net sales for the second straight week, while municipal bond funds posted a fifth weekly outflow worth $2.04 billion.

Investors sold $1.86 billion in US high yield funds and withdrew $3.8 billion from US short/intermediate investment grade funds, marking a 10th straight weekly outflow means.

Chart: Fund Flows: US Bond Funds https://fingfx.thomsonreuters.com/gfx/mkt/mypmnxdyevr/Fund%20flows%20US%20bond%20funds.jpg

However, demand for inflation-linked funds nearly doubled from the previous week as they rallied $0.81 billion in net purchases.

Meanwhile, investors became net sellers of US stock funds, selling $2.81 billion worth of funds compared to $4.57 billion purchases the previous week.

US value funds, on the other hand, pulled $1.41 billion in purchases after two straight weeks of outflows.

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

In sector funds, weekly sales in consumer discretionary funds hit a six-week high of $1.16 billion, while technology and industrials each posted outflows of about $0.85 billion. Mining funds, however, attracted $1.07 billion worth of purchases.

Graphic: Flows of funds: US equity sector funds: https://fingfx.thomsonreuters.com/gfx/mkt/klpykbxllpg/Fund%20flows%20US%20equity%20sector%20funds.jpg

U.S. money market funds posted a second weekly outflow of $18.3 billion, despite selling falling 32% compared to outflows a week ago.

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

Copyright 2022 Thomson Reuters.

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