US investment-grade bond funds and exchange-traded funds suffered record weekly outflows in the week ended July 22 as surging oil prices and rising Treasury yields triggered a sharp selloff in high-quality corporate debt, as per LSEG Lipper data, according to a Reuters report.Investors pulled a net $7.1 billion from U.S. investment-grade bond funds during the week, marking the largest weekly withdrawal on record.
Treasury yields climbed sharply while credit spreads widened, reducing the appeal of fixed-rate corporate debt.The shift in sentiment came as oil prices surged nearly 40% this month to trade above $100 a barrel.
Reuters attributed the rally to Houthi attacks on commercial shipping in the Red Sea and fears of broader military action involving Iran, developments that have heightened concerns about global energy supplies and inflation.The renewed inflation worries have also led investors to reassess the outlook for U.S. monetary policy.
According to Reuters, traders have more than doubled the implied probability of a Federal Reserve interest rate hike at next week's policy meeting to roughly one in three, based on CME Group's FedWatch Tool.The sharp repricing in rate expectations sparked a broad Treasury selloff, pushing the benchmark 10-year U.S.
