Money Market Fund Assets vs. Fed Funds Target Rate Money market funds often experience outflows 12 months after the initial rate cut. This occurs as investors reallocate their investments and adjust their risk exposure in response to fluctuations in interest rates and market conditions. Image: BofA Global Fund Manager Survey
Money Market Fund Flows While the U.S. equity market has been steadily rising since its 2022 low, conservative investors maintain a strong inclination towards holding cash. Image: BofA Global Investment Strategy
12-Month Rolling Money Market In/(Out)Flows vs. NY Fed 12-Month Ahead Yield Curve Implied Recession Probability The probability of a U.S. recession can significantly influence investor behavior, potentially leading to a rotation out of money markets if the likelihood of a recession diminishes. Image: Goldman Sachs Global Investment Research
Cash – U.S. Money Market Funds Deposits as a % of Total Equity and Bond Market Value Cash on the sidelines is not as elevated as many believe. Image: BCA Research
U.S. Money Market Fund Yields vs. U.S. Bank Deposit Rates Higher rates could lead to deposit flight and increased liquidity risk for U.S. banks. Image: J.P. Morgan
Flows into Global Money Market Funds There were significant flows into global money market funds in the first 9 weeks, as rate rises. Image: Goldman Sachs Global Investment Research
Money Market Funds Assets as a % of Global Equity Market Capitalization Cash has been rising in the last few months but remains low as a % of global equity market capitalization. Image: BofA Global Investment Strategy
Cash Levels – S&P 500 and Money Market Fund Assets Investors are still sitting on a high amount of cash, despite the rally in the S&P 500. Image: Alpine Macro
Fund Flows – Bond, Equity and Money Market Funds Since the start of the coronavirus pandemic, more money has gone into bonds than stocks. Image: Fidelity Investments
Money Markets and Risk Assets Should investors expect more upside for stocks, as a wall of money supports risk assets? Image: BofA Global Research
U.S. Money Market Fund Holdings According to J.P. Morgan, the wall of cash may remain very high indefinitely, as defensive assets are delivering their weakest performance. Image: J.P. Morgan