US bond funds gain robust weekly inflow as yields ease

(Reuters) - U.S. bond funds secured the largest weekly inflow in four weeks in the seven days to June 5, driven by a rally in treasury bond prices after softer economic data bolstered expectations of Federal Reserve rate cuts this year.

Investors acquired about $5.06 billion worth of U.S. bond funds during the week, the largest since the week ended May 8, according to LSEG data.

Benchmark U.S. 10-year Treasury yields fell to a two-month low of 4.275% on Wednesday after a report showed that employers added fewer jobs in May than economists expected.

Investors await the U.S. Federal Reserve's meeting next week for insights on the potential for rate cuts this year. The European Central Bank and Bank of Canada both reduced interest rates earlier this week.

US short/intermediate investment-grade funds saw upbeat demand as they drew about $1.53 billion, the largest weekly inflow since April 10.

High yield funds accumulated a robust $1.15 billion, the fourth weekly inflow in five weeks.

Meanwhile, demand for U.S. equity funds recovered partially as they received about $2.29 billion, the fifth weekly inflow in six weeks following about $7.45 billion worth of net selling in the week before.

Large-cap funds secured a massive $4.2 billion in contrast to $1.12 billion in net selling, a week ago. Multi-cap funds also saw marginal purchases, but mid-, and small-cap funds suffered $639 million and $516 million worth of outflows.

Among sectoral funds, utilities gained a sharp $966 billion, the largest weekly inflow since at list August 2020. Investors, meanwhile, withdrew $295 million out of the tech sector following two weekly net purchases in a row.

Investors pumped $29.49 billion into money market funds in their largest weekly net buying since April 3.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; editing by Christina Fincher)