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US high-grade bond funds record inflows after 18 weeks

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U.S. investment-grade corporate bond funds posted cash inflows for the first time since March after gains in debt helped trigger a wave of issuance.

Investors added $1.22 billion for the period ending Aug. 3, according to Refinitiv Lipper data, ending a record 18-week streak of $74 billion in withdrawals. US high-yield bonds are also back in demand, with mutual funds and exchange-traded funds posting inflows of $2.93bn over the same period, the second straight week of inflows, as fears subside about an impending recession.

Borrowers are taking advantage of the upswing. The speculative-grade bond market saw the return of two firms on Thursday, the first offerings in over a week, while social media giant Meta Platforms Inc led another active day in the investment-grade market where issuance has already beaten estimates for the week.

Average yields on investment-grade bonds have been falling for more than a month, hitting 4.38% on Wednesday as early signs of an economic slowdown prompted investors to lower their expectations for rate hikes. the Federal Reserve. Junk bonds rose 5.9% in July, their biggest monthly rally in a decade, and have also rallied in August, according to data from the Bloomberg index.

However, US leveraged loan funds posted outflows for the eighth consecutive week, with withdrawals of US$344 million after an outflow of US$833 million in the previous period.

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