U.S. bond funds saw massive inflows in the week to November 3, as investors reassessed expectations for faster interest rate hikes ahead of the Federal Reserve’s policy meeting, after Treasury yields to short term peaks over several months.
According to Lipper’s data, U.S. bond funds attracted $ 8.1 billion in net purchases, the largest inflows since the week of September 1.
The US central bank on Wednesday announced it was cutting its monthly purchases of $ 120 billion of debt securities to $ 15 billion per month and reaffirmed that the current high inflation should “be transient.” Meanwhile, Fed Chairman Jerome Powell has indicated that more job growth is needed before the central bank raises interest rates.
The 2-year US Treasury yield has fallen more than 10 basis points since reaching a 19-month high last week.
“The bar for tightening has been set too high for the Fed,” Mizuho Bank said in a note to clients.
U.S. taxable bond funds attracted a net inflow of $ 5.98 billion while U.S. municipal bond funds recorded net purchases worth $ 1.61 billion.
US investment grade short / mid-market funds drew $ 2.12 billion net after facing cash outflows the week before, while inflation-protected funds and mortgage funds both attracted over $ 1.5 billion in admissions.
Meanwhile, demand for U.S. equity funds plummeted as they received just $ 167 million, their smallest inflow in five weeks.
The data showed that large and mid-cap equity funds had outflows of $ 1.16 billion and $ 0.37 billion respectively, although small-cap funds received small inflows.
Value US equity funds posted outflows for the third consecutive week valued at $ 1.93 billion, and growth funds reported net sales of $ 1.57 billion.
Among sector funds, healthcare, technology and real estate funds recorded inflows of $ 986 million, $ 840 million and $ 701 million respectively, while consumer discretionary funds recorded outflows of $ 462 million. of dollars.
Meanwhile, US money market funds faced net sales of $ 5.6 billion, up from $ 42.3 billion in net purchases the week before.
Source: Reuters (Report by Gaurav Dogra in Bengaluru; edited by Andrea Ricci)