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U.S. bond funds see lowest weekly inflow in 2-1/2 months on inflation fears, Lipper says By Reuters

by Mike Robinson

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© Reuters. FILE PHOTO – Global indices displayed on a display on the New York Stock Exchange’s trading floor in Manhattan. New York City. U.S.A, August 19, 2021. REUTERS/Andrew Kelly/File photo

(Reuters) – Money inflows to U.S. bonds funds fell in the week ending Oct. 6. This was due to an increase in energy prices, which drove inflationary pressures. Worries over the U.S. debt limit have also limited inflows of short-term bonds.

The week ended Oct. 6 saw a net purchase of $727 million by investors in U.S.-issued bond funds. This was the lowest weekly inflow since July 21, Lipper data revealed.

Short-term bond yields rose during week due to fears of a run on cash by the U.S. Treasury. A default could result without any debt ceiling increases or suspensions.

The U.S. Senate passed legislation Thursday that temporarily raised the $28.4 trillion federal debt limit to avoid a historical default.

(Graphic: Fund flows into U.S. equities bonds and money market funds, https://fingfx.thomsonreuters.com/gfx/mkt/znvnezdmjpl/Fund%20flows%20into%20U.S.%20equities%20bonds%20and%20money%20market%20funds.jpg)

The second consecutive week of U.S. bond funds outflows was worth $483M, while municipal bonds funds attracted net purchases of $988M.

Also, $1.28 Billion was received by inflation-protected bond fund funds. This is the largest inflow since July 31st.

(Graphic: Flows into US bond funds, https://fingfx.thomsonreuters.com/gfx/mkt/klvykzelxvg/Flows%20into%20US%20bond%20funds.jpg)

After two weeks of inflows, U.S. equity fund received $2.85 Billion inflows.

After two consecutive weeks of sales equity funds were purchased by investors for $1.17 trillion. Growth funds saw outflows for the third week in a row, totaling $882 million.

Sector funds were attracted by technology and financials for $785 and $502 respectively. Meanwhile, healthcare funds experienced a second outflow of $1.93 trillion.

(Graphic: Flows into US equity sector funds, https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwlmgyvo/Flows%20into%20US%20equity%20sector%20funds.jpg)

(Graphic: Fund flows into U.S. growth and value funds, https://fingfx.thomsonreuters.com/gfx/mkt/egvbkmnerpq/Fund%20flows%20into%20U.S.%20growth%20and%20value%20funds.jpg)

U.S. money-market funds were facing their first net sales in three weeks. This was a net of $14.03 billion.

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