News Digest: Debt ceiling concerns cause massive outflows in US equity funds
May 17, 2023
The growing concerns over the US debt ceiling amidst the largely disappointing earnings forecast from some of the big companies has resulted in huge outflows from US equity funds during the past week. Refinitiv Lipper reported that the outflows were to the tune of $5.7 billion.
This was also the seventh consecutive week of outflows as investors awaited updates on plans for raising the US debt ceiling amidst concerns of a potential default as early as in June if the Congress did not act to resolve the crisis.
Amidst reports that a meeting between President Biden and top lawmakers had been pushed by a week, the US bond markets saw a small inflow of $532 million while the money market funds received $10.4 billion during the week. However, high-yield bond funds and inflation-linked funds saw outflows worth $1.2 billion and $291 billion respectively while government bond funds saw inflows of $2 billion.