$6,440,000,000,000 Piled Into Money Market Funds As Bank of America Warns Rate Cuts Won’t Fuel Rotation To Stocks

The amount of capital invested in money market funds has surged to a record level with a potential Fed rate cut coming this month.

New figures from the Federal Reserve Economic Data (FRED) show the amount of capital invested in money market funds has soared to over $6.44 trillion as of June of this year.

Money market funds are financial instruments that allow people to invest in lower-risk and short-term debt securities including US Treasuries.

Investors began flocking to the funds in 2022 when the Fed began to aggressively raise interest rates in an effort to stifle soaring inflation, significantly boosting yields in short-term Treasuries.

Although Fed Chair Jerome Powell has signaled rate cuts are inbound, Bank of America (BofA) analysts say they doubt it will have an immediate impact on the popularity of the funds, reports Reuters.

“Rate cuts not a likely spark for equity buying from the [$6.4] trillion money market fund (sector). History shows the first Fed cut precedes more cash inflows in a ‘soft’ landing, and bonds the likely winner if ‘hard’.”

In April, BofA strategists reportedly said historical data shows that cash funds tend to witness more inflows in anticipation of the first rate cut before seeing outflows a year later.

Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

Generated Image: Midjourney

The post $6,440,000,000,000 Piled Into Money Market Funds As Bank of America Warns Rate Cuts Won’t Fuel Rotation To Stocks appeared first on The Daily Hodl.