US bond funds see lowest weekly inflow in two months

Money inflows into US bond funds dropped in the week to Oct. 6 as a surge in energy prices drove inflationary pressures, with worries over the US debt ceiling capping inflows for shorter-term bonds.

Investors purchased a net $727 million in US bond funds in the week to Oct. 6, which was their lowest weekly inflow since July 21, Lipper data showed.

Yields on the shorter-term bonds climbed during the week on fears that the US Treasury might run out of cash, potentially leading to a default

without a debt ceiling increase or suspension.

However, the US Senate approved legislation on Thursday to temporarily raise the federal government’s $28.4 trillion debt limit and avoid the risk of a historic default this month.

US government bond funds saw a second straight week of outflows, worth $483 million, while, municipal debt funds attracted $988 million in net buying.

Inflation-protected bond funds also received $1.28 billion, the highest inflow since the end of July.

US equity funds received inflows of $2.85 billion, after two straight weeks of outflows.

Investors bought $1.17 billion in equity value funds after two straight weeks of sales, while growth funds faced outflows for a third consecutive week, worth $882 million.

Among sector funds, technology and financials attracted $785 million and $502 million, respectively, while healthcare funds marked a second subsequent outflow worth $1.93 billion.

Meanwhile, US money market funds faced the first net selling in three weeks, amounting to a net $14.03 billion.