U.S. bond funds gain inflows for fourth week in a row

FILE PHOTO: Illustration shows U.S. Dollar banknotes

(Reuters) – U.S. bond funds drew money inflows for a fourth straight week in the seven days to Feb. 1, on hopes of slowing rate hikes, with its economy grappling against a slowdown.

Refinitiv Lipper data showed investors purchased a net $197 million worth of U.S. bond funds, although a big drop from the previous week’s $4.84 billion worth of net purchases.

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

The Fed lifted its key overnight lending rate to a range of 4.5% to 4.75% in a widely expected move on Wednesday, but Fed Chair Jerome Powell appeared to strike a more dovish tone in a press conference.

Investors purchased $438 million worth of municipal bond funds, but U.S. taxable bond funds witnessed $252 million worth of outflow, the first weekly net selling in five weeks.

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U.S. short/intermediate investment-grade funds received $2.81 billion worth of inflows, the biggest amount in three weeks, while U.S. emerging markets debt funds had $273 million worth of net buying.

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

Meanwhile, U.S. equity funds’ outflows cooled to an 11-week low of $483 million amid $584 million worth of net purchases in small-cap funds. However, large- and mid-cap funds had outflows of $3.67 billion and $206 million, respectively.

Investors sold tech and real estate sector funds of $261 million and $248 million, respectively, but energy funds drew $436 million worth of inflows.

Fund flows: US equity sector funds https://fingfx.thomsonreuters.com/gfx/mkt/gdpzqdmmovw/Fund%20flows%20US%20equity%20sector%20funds.jpg

Meanwhile, money market funds attracted $122 million, marking a second straight week of inflow.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Ben Dangerfield)