CTMFile – February 21, 2024
Bloomberg’s Alex Harris and Nina Trentmann have reported that investors are ploughing billions into money market funds (MMFs) by the day. Corporate treasurers are hoarding record amounts of cash. The market is digesting a glut of Treasury bills without a hiccup, Harris and Trentmann say.
According to Investment Company Institute data, investors have added US$128bn to US MMFs since the start of the year. Companies were sitting on a record US$4.4 trillion of cash at the end of the third quarter, and after a flood of more than US$1 trillion of T-bills since mid-2023, the market has room for more.
The Bloomberg report notes that traders have dramatically dialled back policy-easing expectations. The more time it takes the central bank to begin lowering its benchmark, the longer cash held in money-market funds should be able to earn 4%, 5% or more, keeping investors from looking further afield.
“The year of cash wasn’t a flash in the pan,” Peter Crane, president of Crane Data LLC, told Bloomberg.“The overall resensitisation to interest rates is still spreading and even a lot of money hasn’t moved or looked at it yet.”
The news comes shortly after ICD Portal, a platform for trading money market funds and other short-term investments, reported annual growth of 37%.
