U.S. bond funds post biggest weekly outflow in 20 months – Lipper

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People walk by the New York Stock Exchange (NYSE) in Manhattan, New York City

– U.S. bond funds witnessed big outflows in the week to Dec. 15 as a surge in inflation solidified investor expectations that the Federal Reserve would be more aggressive in unwinding its stimulus support to counter soaring prices.

According to Refinitiv Lipper data, U.S. bond funds faced net selling of $7.48 billion, that marked the biggest outflow since April 8, 2020.

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

Ahead of the Federal Reserve’s policy meeting earlier this week, data showed U.S. consumer prices surged to nearly a four decade high of 6.8% in the 12 months through November, while the rise in producer prices topped forecasts.

The Fed in its policy meeting this week, doubled the pace of tapering its monthly bond-buying program and flagged three interest rate hikes next year.

Investors sold U.S. taxable bond funds of $5.34 billion, marking the biggest weekly outflow since April 1, 2020, while municipal bond funds saw selling worth a net $1 billion after having attracted inflows for seven straight weeks.

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U.S. short/intermediate investment-grade funds posted outflows of $4.46 billion, marking a fourth consecutive week of net selling. However, loan participation and inflation protected funds pulled in $821 million and $793 million, respectively in net buying.

Graphic: Flows – US bond funds https://fingfx.thomsonreuters.com/gfx/mkt/zgvomndlqvd/Flows%20into%20US%20bond%20funds.jpg

U.S. equity funds witnessed net selling for a second successive week worth $22.28 billion.

U.S. growth funds saw net selling of $13.46 billion, the biggest since at least Jan 2020, while value funds posted outfolws of $5.26 billion.

Graphic: Fund flows – US growth and value funds https://fingfx.thomsonreuters.com/gfx/mkt/jnpweaormpw/Fund%20flows%20into%20US%20growth%20and%20value%20funds.jpg

Among sector funds, technology funds drew $1.2 billion in net purchases after witnessing a outflow in the previous week, however real estate and utilities funds saw outflows of about $0.5 billion each.

Graphic: Flows – US equity sector funds https://fingfx.thomsonreuters.com/gfx/mkt/gdpzymgaovw/Flows%20into%20US%20equity%20sector%20funds.jpg

Meanwhile, U.S. money market funds saw outflows of $1.53 billion, after luring inflows for five consecutive weeks.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Nick Zieminski)