U.S. equity funds suffered their third consecutive weekly outflow in the week ended October 12, as stocks were hit by concerns over a recession due to a rise in interest rates and inflation.
Refinitiv Lipper data showed that U.S. equity funds faced outflows worth $2.1 billion in the week, after witnessing a combined total net sales of $11.1 billion in the previous two weeks.
Concerns over rising inflation levels rose following a surprise rise in September U.S. producer prices, while caution ahead of minutes from the Federal Reserve’s last meeting also crimped equity flows.
U.S. bond funds also witnessed outflows worth $4.9 billion, the biggest in two weeks, as bonds globally were sideswiped by a rout in British government bonds.
The yield on 10-year Treasuries climbed to 4.08% this week, the highest in 14 years, as higher inflation raised fears the Federal Reserve’s ongoing efforts to tame inflation will spark a recession.
U.S. inflation-linked bond funds had outflows worth $417 million, while, U.S. high-yield bond funds had an outflows of $876 million during the week.
The Ishares iboxx high-yield corporate bond ETF (HYG.P) on Thursday fell to its lowest level since March 2020, in the wake of U.S. inflation data indicating U.S. interest rates will continue to be raised to combat fast-rising prices.
On the other hand, lower risk U.S. money market funds attracted an inflow of $5.8 billion, while U.S. government bond funds pulled in $3.7 billion.