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

October 8, 2021

(Reuters) – Money inflows into U.S. bond funds dropped in the week to Oct. 6 as a surge in energy prices drove inflationary pressures, with worries over the U.S. debt ceiling capping inflows for shorter-term bonds.

Investors purchased a net $727 million in U.S. bond funds in the week to Oct. 6, which was their lowest weekly inflow since July 21, Lipper data showed.

Yields on the shorter-term bonds climbed during the week on fears that the U.S. Treasury might run out of cash, potentially leading to a default without a debt ceiling increase or suspension.

However, the U.S. Senate approved legislation on Thursday to temporarily raise the federal government’s $28.4 trillion debt limit and avoid the risk of a historic default this month.

(Graphic: Fund flows into U.S. equities bonds and money market funds, https://ift.tt/3FDKK54)

U.S. government bond funds saw a second straight week of outflows, worth $483 million, while, municipal debt funds attracted $988 million in net buying.

Inflation-protected bond funds also received $1.28 billion, the highest inflow since the end of July.

(Graphic: Flows into US bond funds, https://ift.tt/3Frs08B)

U.S. equity funds received inflows of $2.85 billion, after two straight weeks of outflows.

Investors bought $1.17 billion in equity value funds after two straight weeks of sales, while growth funds faced outflows for a third consecutive week, worth $882 million.

Among sector funds, technology and financials attracted $785 million and $502 million, respectively, while healthcare funds marked a second subsequent outflow worth $1.93 billion.

(Graphic: Flows into US equity sector funds, https://ift.tt/3DePNXA)

(Graphic: Fund flows into U.S. growth and value funds, https://ift.tt/3uSV4Ry)

Meanwhile, U.S. money market funds faced the first net selling in three weeks, amounting to a net $14.03 billion.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Paul Simao)

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