We reached the point of diminishing returns months ago on stating and restating the same general narrative around the enduring appeal of 5%-yielding cash (forgone gains in riskier assets aside), but I’d be remiss not to quickly mention this week’s update on money market fund flows.

Money funds took in almost $53 billion in the week to August 7, ICI data released after the bell on Thursday showed.

That was the third largest haul of 2024, and pushed total AUM to almost $6.2 trillion, a new record.

The lion’s share of the inflows fell into the institutional government category, but retail flows were robust as well.

The context is the same as it is for everything else this week: Volatility associated with US recession fears (i.e., repriced hard landing odds) and the turmoil in Japan drove a safe-haven bid, and that likely benefited USD cash, the safest asset of them all.

For 2024 as a whole, money fund AUM has now ballooned by well more than $300 billion.

Since the beginning of 2023, MMFs have taken in nearly $1.5 trillion.

Needless to say, the Fed will be cutting rates soon, and quite possibly in upsized increments (i.e., 50bps contingent, of course, on the evolution of the macro data), but that’s not going to deter MMF inflows.

The story hasn’t changed here, or not that I’m aware of. Institutional money and corporate cash piles will continue to find their way into government money funds for the foreseeable future, or at least for the balance of 2024. Institutional funds will also get a fillip from rule changes that take effect this year.

There’s still an argument to be made that the Fed’s inadvertently supporting demand (i.e., spending, both by well-to-do households and corporate America’s “haves”) by staying parked at terminal. $6.2 trillion’s a lot of money. And it’s all generating somewhere in the neighborhood of 5%.