US equity funds see third weekly inflow on rate optimism

(Reuters) – U.S. equity funds continued to accumulate inflows in the week to Nov. 22 as investor sentiment was buoyed by expectations of a pause in U.S. interest rate hikes, with a concurrent decline in Treasury yields further fuelling risk appetite. LSEG data showed that U.S. equity funds received a net $6.27 billion, the third weekly inflow in a row.

The dropped about 19 basis points last week, boosting demand in sectors such as technology. The yield hit a two-month low of 4.416% on Wednesday. Technology sector funds received $2.29 billion during the week, the biggest inflow since mid-December 2021. Investors, however, pulled out $382 million and $339 million, respectively from utilities and healthcare sectors.

By segment, U.S. large-cap funds attracted $4.89 billion in inflows, continuing a five-week trend of net buying. Small- and multi-cap funds also saw inflows of about $1.45 billion and $1.43 billion, respectively, while mid-cap funds faced $824 million in outflows. Meanwhile, U.S. bond funds observed a net withdrawal of about $266 million, breaking a two-week streak of net purchases. U.S. short/intermediate government & Treasury funds experienced substantial withdrawals of $2.8 billion, the largest since Dec. 7, 2022. U.S. emerging markets debt funds and high-yield bond funds, however, received about $605 million and $319 million, respectively in inflows.

U.S. investors also poured about $19.38 billion into money market funds, extending inflows into a fifth consecutive week.