Investors have pulled money from US mortgage-backed bond funds over the past three weeks, with outflows among the seven worst since early 2021. The US MBS index posted its second-worst monthly performance on record in September as Treasury yields climbed to multi-decade highs. Strategist Erica Adelberg said Fed tightening and a flattening yield curve are eroding bank demand for MBS, with supply expected to fall by year-end as mortgage rates hit their highest since 2023.