Introduction
U.S. equity funds experienced significant outflows for the week ending May 21, following rising Treasury yields amid concerns over a potential increase in national debt due to President Donald Trump’s proposed tax-cut bill.Context
Data from LSEG Lipper revealed that investors withdrew a net $11 billion from U.S. equity funds, reversing the previous week's inflows of $13.6 billion. This shift in investment sentiment coincided with a sharp increase in the 30-year Treasury yield, which reached a 19-month high on Thursday. The rise brought it close to levels not seen since 2007, exacerbated by debates in the House of Representatives surrounding debt concerns.Developments
In addition to the outflows in equity funds, U.S. bond fund inflows decreased to $7.6 billion, representing a 24% decline from the previous week. Despite this drop, certain investors remained active in the bond market, motivated by attractive yield levels. Specifically, U.S. government bond funds attracted $2.8 billion, while high-yield bond funds garnered $1.1 billion.Conversely, U.S. money market funds saw a resurgence, drawing in net inflows of $20.6 billion, following a previous week that experienced outflows of $10.5 billion.