U.S. bond funds see first weekly outflow in over four months -Lipper

(Reuters) – U.S. bond funds posted a net outflow in the week to Nov. 24 as investors raised bets that the Federal Reserve would become more aggressive in normalizing monetary policy to fight inflation after President Joe Biden nominated Jerome Powell as chairperson for a second term. According to Refinitiv Lipper data, investors sold U.S. bond funds worth a net $158 million, the first outflow since the week to July 14.

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

The two-year U.S. Treasury yield, which typically moves in step with interest rate expectations, rose to 0.687% on Tuesday, its highest level since early March 2020.

However, Treasury yields dipped on Friday as concerns about a new COVID-19 variant drove demand for safe-haven assets.

U.S. taxable bond funds faced net selling of $1.08 billion compared with inflows of $3.97 billion in the previous week. Municipal bond funds attracted $598 million in net buying, the smallest in four weeks.

U.S. short/intermediate investment-grade funds witnessed outflows of $781 million but U.S. general domestic taxable fixed income funds and inflation protected funds received $1.83 billion and $1.15 billion in inflows respectively

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

U.S. equity funds saw net selling for a second straight week worth $4.27 billion.

Investors sold large-cap equity funds of $4.4 billion, however, they purchased small- and mid-cap equity funds of $2.17 billion and $1.84 billion respectively.

U.S. growth and value funds saw outflows amounting to $2.2 billion and $872 million respectively.

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

Technology and real estate funds drew inflows of $730 million and $539 million respectively, while financials and health care, each saw more than $0.7 billion in outflows.

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

Meanwhile, U.S. money market funds pulled in $14.98 billion in net buying, the biggest inflow in four weeks.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Kirsten Donovan)