Friday, October 27, 2023

Big inflows in US money market funds due to debt ceiling caution


In the week leading up to May 24, US money market funds experienced significant inflows as investors sought safer options ahead of the deadline for politicians to agree on raising the country’s debt ceiling. Refinitiv Lipper data showed that these funds received a net $39.9 billion in inflows, marking the biggest week of net buying in four weeks. While US President Joe Biden and top congressional Republican Kevin McCarthy are nearing a deal to raise the government’s $31.4 trillion debt ceiling for two years, time is running out as the US Treasury estimates it will run out of funds within a week. As a result, riskier equity funds saw outflows for a ninth straight week, worth $1.79 billion, with investors selling $1.06 billion from US equity value funds and $703 million from growth funds. However, sectoral equity funds remained in demand, with tech and consumer discretionary sectors receiving a net $420 million and $289 million, respectively. US bond funds attracted a fourth week of inflows, worth about $4.22 billion, with government bond funds receiving $2.43 billion in a fifth straight week of net buying. US corporate and high yield funds also drew $1.72 billion and $677 million of inflows, respectively, but inflation protected funds suffered a sixth weekly outflow of $565 million.

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