Investors looking for yield in cash-like investments poured one other $66 billion into money-market funds this week, bringing whole property to a file $5.2 trillion, in keeping with the Investment Company Institute.
The bulk of the weekly inflows, at $71 billion, went into authorities funds, which put money into money, Treasury securities and government-backed debt, in keeping with the weekly ICI knowledge by March 29.
Overall asset holdings, nonetheless, had been offset by $5.4 billion of weekly outflows to prime money-market funds.
Helping to draw traders to authorities debt, the six-month Treasury charge
TMUBMUSD06M,
was close to 4.88% on Thursday, up from above 1% a 12 months in the past, in keeping with FactSet knowledge.
Heavy inflows to money-market funds have been in main focus in March after a run on deposits hastened the collapse of Silicon Valley Bank and Signature Bank and raised considerations concerning the stability of the U.S. banking system.
“Strong flows into U.S. government money market funds continued this past week, pushing total assets for all money funds to a new record high,” mentioned Shelly Antoniewicz, ICI senior director of trade and monetary evaluation, in emailed commentary.
But she additionally mentioned the fast clip of inflows of the earlier two weeks had considerably subsided “as turmoil in the banking industry started to calm.”
See: Banks trim borrowing from the Fed for second straight week in wake of SVB failure
Aside from stability considerations, banks additionally now should compete with the relative attractiveness of presidency debt as savers search for different methods to earn revenue a 12 months into the Federal Reserve’s fast rate-hiking cycle.
Read: The first wave of deposit outflows is sort of over. A second wave has already began, this strategist says.
Liz Ann Sonders, chief funding strategist at Charles Schwab, nonetheless identified {that a} file quantity of money-market fund property don’t imply traders have gone completely to the sidelines.
She seemed on the $5.2 trillion of money-market property as a share of the market capitalization of the S&P 500 index
SPX,
over time (see chart).
On that foundation, Sonders famous the share of money-market funds nonetheless was beneath the 2020 COVID bear-market peak. The S&P 500 was up 5.5% on the quarter by Thursday at 4,050, 2% of which was gained within the tumultuous month of March for banks, in keeping with Dow Jones Market Data.
The Nasdaq Composite Index
COMP,
was up 14.8% for the quarter, on tempo for its greatest 3-month stretch for the reason that fourth-quarter of 2020.
Related: Piles of commercial-real-estate loans at banks could also be value simply 77 cents on the greenback — if that
Source web site: www.marketwatch.com
