US money market funds see big inflows amid debt ceiling caution

May 26 (Reuters) – US money market funds saw big inflows in the week to May 24 as investors favored safer bets ahead of a deadline for politicians to agree on an increase in the country’s debt ceiling.

According to Refinitiv Lipper data, US money market funds received a net USD 39.9 billion of inflows, the biggest week of net buying in four weeks.

US President Joe Biden and top congressional Republican Kevin McCarthy are closing in on a deal to raise the government’s USD 31.4 trillion debt ceiling for two years, a US official told Reuters, but time is running short.

The US Treasury estimates it will run out of funds within a week, and legislating any deal will take that down to the wire.

Meanwhile, riskier equity funds saw outflows for a ninth straight week, worth USD 1.79 billion.

Investors sold USD 1.06 billion from US equity value funds and USD 703 million from growth funds, respectively.

Meanwhile, sectoral equity funds remained in demand as they drew a net USD 335 million worth of inflows. Tech and consumer discretionary sectors received a net USD 420 million and USD 289 million, respectively.

On the other hand, US bond funds attracted a fourth week of inflows, worth about USD 4.22 billion.

Government bond funds received USD 2.43 billion in a fifth straight week of net buying.

US corporate and high-yield funds also drew USD 1.72 billion and USD 677 million of inflows, respectively, but inflation-protected funds suffered a sixth weekly outflow of USD 565 million.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; Editing by Mark Potter)