In the week leading up to Feb. 28, U.S. investors showed significant interest in money market funds amidst uncertainties surrounding potential interest rate cuts and ahead of a pivotal inflation report.
According to data from LSEG, they made a substantial net purchase of $42.54 billion in U.S. money market funds, marking the largest weekly acquisition since Jan. 3.
The release of the U.S. Federal Reserve’s core personal consumption expenditures (PCE) price index data revealed the smallest annual increase in inflation in nearly three years, adding to investor apprehensions.
This came after recent consumer and producer price readings surpassed expectations, heightening concerns.
In contrast, U.S. equity funds experienced a positive turnaround, witnessing $196 million in inflows for the week following a net selling of approximately $4.89 billion in the previous week.
Optimism stemming from Nvidia’s optimistic earnings outlook contributed to this sentiment boost.
Notably, the tech sector, which had previously experienced outflows, saw inflows of $520 million during the week.
Similarly, the consumer discretionary and metals & mining sectors attracted $262 million and $236 million in inflows, respectively.
In terms of fund segments, U.S. growth funds saw a reversal of fortunes with $613 million in inflows, rebounding from an outflow of $3.57 billion in the preceding week.
However, value funds continued to face challenges, with outflows amounting to $449 million, marking a second consecutive week of net selling.
Meanwhile, U.S. bond funds maintained their appeal for the 10th consecutive week, drawing in a net inflow of $1.88 billion.
Among these, U.S. short/intermediate investment-grade funds saw the highest inflow in three weeks, totaling $2.59 billion.
However, high yield and short/intermediate government & treasury funds experienced net selling of $450 million and $267 million, respectively.