$6,470,000,000,000 Crammed Into Money Market Funds As JPMorgan Chase Issues Rate Cut Warning

Investors have now deposited a record $6.47 trillion into money market funds, according to a new report.

In the last week alone $11 billion has entered the funds, reports Bloomberg, citing data from the Investment Company Institute.

Investors flocked to money market funds as the Federal Reserve raised interest rates to get higher yields on their cash.

Now that the Fed has started to cut rates, analysts at JPMorgan Chase warn the money market mania will come to an end – but not in the short term.

“Typically, money-market funds do not experience outflows until the Fed is further along the easing cycle and the Treasury curve has normalized and become stable.”

JPMorgan strategists say that during Fed easing cycles, it typically takes a few months for money to begin exiting money markets.

This time around, they say it could take longer for outflows to begin. They’re tracking the yield curve between three-month Treasury bills and two-year bills, which is still inverted, as a key indicator.

The majority of the fresh money entering the funds in the past week came from retail investors, who fueled $8 billion in inflows.

The remaining $3.19 billion came from institutional investors.

 

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