(Reuters) – U.S. bond funds witnessed a surge in outflows in the week to Dec. 1 on rising prospects that the U.S. Federal Reserve will ramp up the pace of unwinding its bond purchases and will lift rates as soon as mid-2022. According to Refinitiv Lipper data, investors sold U.S. bond funds worth a net $2.16 billion, compared with their net selling of $245 million in the previous week.
Fund flows into U.S. equities bonds and money market funds: https://fingfx.thomsonreuters.com/gfx/mkt/xmpjonkxavr/Fund%20flows%20into%20U.S.%20equities%20bonds%20and%20money%20market%20funds.jpg
Despite concerns over the Omicron coronavirus variant, the two-year U.S. Treasury yield jumped 7 basis points on Wednesday after the Fed chief said that in December the Fed will discuss whether to end their bond purchases a few months earlier than expected.
U.S. taxable bond funds witnessed net selling of $3.03 billion, that was the largest weekly outflow since early-April 2020. However, municipal bond funds attracted inflows of $1.14 billion.
U.S. short/intermediate investment-grade funds and loan participation funds witnessed outflows of $1.84 billion and $304 million respectively, while weekly inflows into U.S. inflation protected funds also dropped to a four-month low of $169 million.
Flows into US bond funds: https://fingfx.thomsonreuters.com/gfx/mkt/klpykngorpg/Flows%20into%20US%20bond%20funds.jpg
However, U.S. equity funds drew $7.56 billion in net buying, their largest inflow in five weeks. Large cap funds pulled in $13.09 billion after two straight weeks of net selling, although investors sold small- and mid-cap equity funds worth $1.96 billion and $104 million respectively. U.S. growth funds attracted $621 million in net purchases after four straight weeks of outflows. However, value funds saw net selling of $2.22 billion, the biggest in six weeks.
Fund flows into U.S. growth and value funds: https://fingfx.thomsonreuters.com/gfx/mkt/dwvkrzdnbpm/Fund%20flows%20into%20U.S.%20growth%20and%20value%20funds.jpg
Technology funds lured inflows for a third straight week worth $2.39 billion, although financials and industrials posted outflows of $1.51 billion and $481 million respectively.
Meanwhile, U.S. money market funds secured a net $29.27 billion in net purchases, the biggest inflow in five weeks.
Flows into U.S. equity sector funds: https://fingfx.thomsonreuters.com/gfx/mkt/zjpqkyjgbpx/Flows%20into%20U.S.%20equity%20sector%20funds.jpg
(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Shailesh Kuber)