After the global sell-off of risky assets last week caused investors to cash out, funds further flowed into high-quality assets, causing the size of U.S. money market fund assets to hit a new high. According to data from the Investment Company Institute, about $28.4 billion flowed into U.S. money market funds in the week ending August 14. Total assets rose to an all-time high of $6.22 trillion, surpassing the record of $6.19 trillion set the previous week.
Retail investors have piled into money funds since the Federal Reserve began one of its most aggressive tightening cycles in decades in 2022. The inflows have continued so far even as investors expect the Fed to start cutting interest rates soon.
In addition, Bank of America released a global fund manager survey report on Tuesday. Data showed that institutional investors have increased their cash asset allocation and significantly cut their long stock positions so far in August as global economic growth expectations have fallen to the lowest level in eight months and expectations of a US recession have increased.
According to a Bank of America survey, 31% of respondents said they increased their stock assets in August, far lower than 51% in the same period of July, while their average cash asset allocation accounted for 4.3% of their managed assets, higher than 4.1% a month ago.
The resilience of the U.S. economy has prompted traders to scale back expectations for big rate cuts from the Federal Reserve this year, with them pricing in less than 30 basis points of cuts next month. Traders are pricing in a total of 92 basis points of rate cuts from the Fed through the rest of 2024, down from a previous forecast of more than 100 basis points.
But even after the Federal Reserve began lowering borrowing costs, money market funds continued to attract cash as institutions and corporate treasurers, among others, preferred to outsource cash management for a profit rather than try to solve the problem themselves.
As of August 14, assets of government funds (which invest primarily in securities such as Treasury bills, repurchase agreements and agency debt) increased by $30.3 billion to $5.04 trillion.
Assets in institutional prime funds, which tend to invest in riskier assets such as commercial paper, fell by $1.04 billion to $1.05 trillion. On the institutional side, money left prime money market funds, a sign that investors are beginning to adjust their allocations ahead of the latest set of U.S. Securities and Exchange Commission regulations set to take effect later this year.
Money market funds invest in short-term, highly liquid financial instruments, such as short-term government bonds, commercial bills and bank deposits. Due to the high liquidity, extremely low risk and price stability of this type of fund, it can meet the needs of investors for redemption at any time. Money market funds are often regarded by investors as cash equivalents that can be converted into cash very quickly. These money market funds are a common choice for investors seeking a safe haven during market fluctuations, and are also suitable for short-term cash management needs. #美国CPI数据连续第4个月回落 #美联储何时降息？ #加密市场反弹 #美国7月PPI低于预期 $BTC $ETH $SOL
