(Reuters) – US investors remained net sellers of bond funds for the week ended May 4 as the economy’s mounting inflationary challenges prompted caution ahead of this week’s Federal Reserve monetary policy meeting.
US investors dumped $5.52 billion in bonds for the 17th straight week of net selling, according to data from Refinitiv Lipper.
Graphic: Fund flows: US equities, bonds and money market funds – https://fingfx.thomsonreuters.com/gfx/mkt/lgpdwgeggvo/Fund%20flows%20US%20equities%20bonds%20and%20money%20market%20funds.jpg
The benchmark 10-year Treasury yield nearly touched a 3-1/2-year high of 3% this week after last week’s reports showed rising US consumer spending in March and rising labor costs in the first quarter.
After an expected 50 basis point hike in central bank interest rates on Wednesday, Fed Chair Jerome Powell ruled out a 75 basis point rate hike at an upcoming meeting, although he made it clear that the Fed already has rate hikes in mind “won’t be comfortable.”
Investors sold $3.82 billion in taxable U.S. bond funds and $1.75 billion in municipal funds.
US short/intermediate investment grade funds posted net sales of $5.46 billion for the 17th consecutive week. However, loan equity funds drew $0.83 billion in inflows, the largest amount in three weeks.
Chart: Fund Flows: US Bond Funds – https://fingfx.thomsonreuters.com/gfx/mkt/byvrjnaomve/Fund%20flows%20US%20bond%20funds.jpg
Meanwhile, weekly US equity fund outflows fell to a four-week low of $3.76 billion.
US value funds posted their first weekly inflow in seven weeks of $854 million, while growth funds posted net sales of $3.93 billion, though it was the lowest outflow in four weeks.
Graphic: Fund Flows: US Growth and Value Funds – https://fingfx.thomsonreuters.com/gfx/mkt/akpezyrdovr/Fund%20flows%20US%20growth%20and%20value%20funds.jpg
Among sector funds, technology and financials lost $724 million and $593 million in net sales, respectively, while utilities posted $542 million in net purchases. Graphic: Flows of Funds: US Equity Sector Funds – https://fingfx.thomsonreuters.com/gfx/mkt/zgvomleqkvd/Fund%20flows%20US%20equity%20sector%20funds.jpg
US money markets saw net purchases of $2.63 billion, despite inflows falling 94% compared to the previous week.
(Reporting by Gaurav Dogra in Bengaluru; Editing by Paul Simao)
Copyright 2022 Thomson Reuters.