U.S. bond funds record biggest weekly outflow in eight weeks

Investors dumped U.S. bond funds in the week to Aug 24 as they waited to hear a speech by Federal Reserve Chair Jerome Powell later on Friday which will be scrutinised for clues on the pace of forthcoming interest rate hikes.

According to Refinitiv Lipper data, U.S. bond funds witnessed outflows worth a net $8.81 billion, the most in a week since June 22.

U.S. yields across the curve, from two-year notes to 30-year bonds, hit highs last seen between five and 10 weeks ago as market participants positioned for hawkish comments from Powell.

Investors jettisoned U.S. taxable bond funds worth a net$7.67 billion, the biggest amount in nine weeks, while municipal bond funds saw net outflows of $1.36 billion.

U.S. high yield funds also suffered $4.72 billion worth of net selling, the biggest outflow in over two months, while general domestic taxable fixed income, and short/intermediate government & treasury funds recorded net withdrawals of $1.7 billion and $883 million respectively.

However, safer money market funds drew their biggest weekly net inflow since July 6 at $11.07 billion.

U.S. equity funds were also out of favour, posting a net weekly outflow of $2.19 billion after two weeks of net purchases.

Investors sold U.S. growth funds worth a net $3.31 billion in their biggest weekly disposal since July 20, while also exiting $1.75 billion in value funds.

Tech and industrials recorded net outflows of $1.77 billion and $723 million, respectively, although financials attracted $1.87 billion in net buying.