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BofA warns: In a single week 166400000000 USD poured into money market funds; cash may not flow back into stocks before rate cuts
BlockBeats reports that,October 9, Bank of America strategist Michael Hartnett said that, as of October 7 the week, money market funds attracted 166400000000 USD in inflows, the largest weekly amount since 2020 April years. During the same period, bond funds and equity funds received 33800000000 USD and 12400000000 USD in inflows, respectively, indicating that investors are clearly increasing their allocations to cash-like assets.
Hartnett noted that, in the current high-interest-rate environment, cash itself offers considerable yield appeal, so the huge scale of money market funds can no longer simply be viewed as “ammunition” waiting to enter the stock market. He summarized the current flow dynamics as “cash will not decrease without rate cuts,” and believes that only sustained and substantial monetary easing by the Federal Reserve is more likely to drive large-scale capital out of cash-like assets.
Recently, yields on U.S. 10-year and 30-year Treasury bonds have continued to rise, while the Federal Reserve September raised the federal funds target range to 3.75%—4.00%. Against a backdrop of persistently high cash yields and recovering bond appeal, the stock market is facing competition from both cash and fixed-income assets.
Hartnett also regarded the November 3 U.S. midterm elections as an important event that could trigger substantial stock-market volatility during the year, and urged investors to watch for risks including deteriorating U.S. market breadth and rising long-term bond yields.
Original link https://m.theblockbeats.info/flash/371019