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Long Cash!
Another week, another new record for money market fund assets.
Money funds took in $29.12 billion in the six-day "week" leading up to Thanksgiving in the US, the latest ICI release showed.
It was the fifth consecutive weekly inflow. Total AUM now sits at $5.763 trillion.
Government and prime funds each saw inflows from both institutional and retail investors.
The same familiar narrative applies. Rates on money funds are very attractive and although bonds have the potential to offer equity-
How is this consistent with the previous article that highlights another massive move into U.S. equities? Where is the money coming from?
Well, I mean, if I buy stocks and you put money into a money market fund, that’s an inflow to stocks and an inflow to money funds. It’s not a closed system.
Would that mean money is coming from M1 then?
I’m thinking most of that was moved from bank deposits, plus income flow being parked in MMF? As opposed to shifted from some other “asset class”.
I don’t think all of that as “dry powder” for markets, as much of it was probably sitting in bank deposit accounts not associated with brokerage accounts. But some of it probably is. Just 25% would be a good deal of dry powder.