A complete of $7 trillion is now totally sidelined as a gaggle of traders refuse to pour their money into danger property, in line with a brand new report.
New figures present the quantity of capital sitting on the sidelines in cash market funds is at a recent report excessive, experiences Reuters.
Cash market funds enable folks to spend money on lower-risk and short-term debt securities together with US Treasuries.
Traders started flocking to them in 2022 when the Fed started to aggressively increase rates of interest, boosting yields.
Flash-forward to immediately, the quantity of capital within the funds continues to rise at a fast charge – even if the Fed is now slicing charges.
“On this topsy-turvy world, MMFs have emerged as a premium vacation spot for traders’ money… occasions haven’t returned to ‘regular’, and Treasury yields have been beneath the fed funds charge for 2 years.”
As for if, or when, cash market funds will start to witness outflows, Financial institution of America strategists say it usually occurs a yr after the primary charge lower.
That may be in September of subsequent yr.
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