U.S. bond funds suffered big outflows in the week to April 19 on expectations that the Federal Reserve would continue to hike interest rates to tackle inflationary pressures.

Refinitiv Lipper data showed $3.1 billion worth of net selling from U.S. bond funds after two weeks of inflows.

Last week, data on the U.S. labour market and producer prices showed inflation eased, but not at a fast enough pace to allow the Federal Reserve to pause raising interest rates in May.

Fed Governor Christopher Waller said that he expected the economy and inflation to remain stronger than expected, bolstering rate hike expectations.

Investors disposed of $3.16 billion of municipal bond funds in their biggest weekly net selling since December 21, 2022, but purchased about $5 million worth of taxable bond funds.

U.S. short/intermediate government & treasury and loan participation funds faced outflows of $1.44 billion and $542 million, respectively, but high-yield funds received a net $2.88 billion in inflows.

Meanwhile, equity funds witnessed a fourth week of outflow, worth about $1.51 billion.

Investors sold U.S. mid-, and small-cap funds of $603 million and $390 million, respectively, but purchased large-cap funds of $797 million.

By sector, real estate suffered outflows of $646 million. However consumer staples and healthcare drew $580 million and $534 million worth of inflows, respectively.

Meanwhile, investors exited $71.66 billion worth of money market funds after a combined net purchase of $346 billion in the previous five weeks.

(Reporting by Gaurav Dogra and Patturaja Murugaboopathy in Bengaluru; editing by Barbara Lewis)