Inflows into U.S. bond funds dip on inflation jitters, Lipper finds

FILE PHOTO: People are seen outside the NYSE in New York
FILE PHOTO: People are seen outside the New York Stock Exchange (NYSE) in New York City, U.S., March 19, 2021. REUTERS/Brendan McDermid/File Photo

July 16, 2021

(Reuters) – Money inflows into U.S. bond funds fell in the week to July 14 after data showing higher inflation reinforced expectations the Fed may raise its interest rates soon.

Data from Refinitiv Lipper showed U.S. bonds received a net inflow of $4.8 billion in the week, a 45% drop compared with the previous week.

This week’s data from U.S. Labor Department showed the consumer price index rose by the most in 13 years in June.

U.S. high-yield bonds witnessed outflows worth $1.6 billion, the most in four weeks.

Graphic: Fund flows into U.S. equities bonds and money market: https://fingfx.thomsonreuters.com/gfx/mkt/qmyvmdzrgpr/Fund%20flows%20into%20U.S.%20equities%20bonds%20and%20money%20market.jpg

U.S taxable bond funds and municipal bond funds saw a big dip in inflows, the data showed.

Meanwhile, investors turned net buyers of U.S. equities in the week. U.S. growth funds received $1.6 billion, the largest inflow in four weeks.

By contrast, U.S. value funds witnessed net selling for a fourth straight week.

Among specialist funds, investors purchased health care sector funds worth $1.2 billion, the biggest weekly inflow this year.

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

Graphic: Flows into U.S. equity sector funds: https://fingfx.thomsonreuters.com/gfx/mkt/nmovaxerqpa/Flows%20into%20U.S.%20equity%20sector%20funds.jpg

Investors sold $31.2 billion worth of U.S. money market funds, marking their largest outflow in seven months.

Graphic: Flows into U.S. bond funds: https://fingfx.thomsonreuters.com/gfx/mkt/jznpnywgjvl/Flows%20into%20U.S.%20bond%20funds.jpg

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; editing by Barbara Lewis)