US bond funds attract biggest weekly inflow since mid-2021 on rate cut hopes By Reuters

(Reuters) – U.S. bond funds racked up large inflows in the seven days to March 6 as weaker manufacturing data and dovish comments from Federal Reserve officials raised expectations for interest rate cuts later this year.

According to data from the London Stock Exchange Group (LON:), investors pumped in about $10.54 billion into U.S. bond funds during the week in their largest weekly net purchase since end-June 2021.

The robust inflows coincided with indications from U.S. central bankers that, despite recent inflation pressures, overall progress could allow for possible rate reductions. Fed Chair Jerome Powell’s recent testimonies solidified this outlook.

The yield on the two-year U.S. Treasury, closely tied to interest rate expectations and moving inversely to prices, experienced a notable decline last week, falling 15.7 basis points – its largest drop in six weeks. Specifically, U.S. short/intermediate investment-grade funds attracted $4.21 billion, the most since March 24, 2021. Additionally, general domestic taxable fixed income and government bond funds saw inflows of $4.65 billion and $1.35 billion, respectively.

U.S. equity funds, meanwhile, attracted inflows for a second successive week, totalling about $1.2 billion on a net basis that topped $171 million worth of net buying in the prior week. The real estate, and consumer discretionary sectors witnessed significant buying interest as they received $1.11 billion and $777 million, respectively, the largest among sectoral funds. Parallelly, technology sector received $438 million, its second weekly inflow in a row.

Money market funds, meanwhile, accumulated about $13.44 billion on a net basis during the week, a sharply smaller amount against $42.55 billion worth of inflows in the preceding week.