NEW YORK (Reuters) - U.S.-based money market funds attracted $11.84 billion in the week ended Wednesday, following outflows of $6.39 billion the previous week, Lipper data showed on Thursday, indicating investors’ appetite for risk-taking waned as talks between the United States and Canada to renegotiate the North American Free Trade Agreement continued.
U.S.-based equity funds posted $7.2 billion of outflows in the week ended Wednesday, following two weeks of inflows, Lipper said. U.S.-based taxable bond funds posted over $1.1 billion of outflows in the week ended Wednesday, following four weeks of inflows, according to Lipper.
“It was risk-off week, pointing to the outflows for high-yield bond funds, too, of about $639 million as well as the inflows into money market funds,” said Pat Keon, senior research analyst at Thomson Reuters Lipper. “NAFTA talks as well as China tariffs contributed to this.”
Keon was referring to a public comment period, on the Trump administration’s plan for fresh tariffs on $200 billion in Chinese imports, ending on Thursday. China has warned of retaliation if Washington implements any new tariff measures.
“Of note, among the equity fund outflows was a $3.6 billion outflow for equity ETFs. This broke a streak of eight consecutive weekly net inflows for equity ETFs with the largest individual outflow belonging to SPDR S&P 500 ETF (SPY) which saw $9.1 billion leave,” Keon said.
Keon also noted the continued net inflows for the Ultra Short Obligation Funds (USO) peer group, which took in $950 million last week. That was their 26th straight weekly net inflow for a total take of $19.5 billion, he said. The year-to-date net inflows for the group are $31.9 billion.
“This would be their highest annual net inflow ever, beating last year’s plus $24.7 billion,” Keon said. “USO funds are used to offset interest rate risk, which has been growing with the Fed raising rates as well as the narrowing of the yield curve,” he said.
Reporting by Jennifer Ablan; editing by Diane Craft and James Dalgleish