Monetary titan Financial institution of America (BofA) says cash market funds simply witnessed a deluge of greater than half a trillion {dollars} value of capital.
In keeping with a current BofA investor be aware, cash market funds have attracted $756 billion in investments this yr amid the lingering banking disaster and the Federal Reserve’s aggressive charge hikes, per Reuters.
A cash market fund is a kind of mutual fund that seeks yield by investing in high-quality short-term debt, together with these supplied by the US authorities. Yields out there on cash market funds have skyrocketed this yr because of the steep rise in rates of interest.
In keeping with the monetary large, the circulation of capital into cash market funds is nearing a degree final witnessed about three years in the past when traders panicked and redirected $917 billion into money funds amid the Covid-19 pandemic.
Whereas traders are pouring an immense quantity of capital into cash market funds, BofA’s investor be aware reveals that it comes on the expense of the inventory market.
Citing numbers from monetary analytics agency EPFR, BofA reveals that funds targeted on the inventory market noticed their third consecutive weekly outflows to the tune of $3.9 billion
Financial institution of America’s chief funding strategist Michael Hartnett reportedly stated within the investor be aware that the inventory market may witness a significant sell-off occasion within the coming weeks.
“We anticipate one other bout of risk-off to return (in) late June.”
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