U.S. money market funds attracted $122 billion in a single week, marking the largest influx of funds in six years.

As the US tax filing season comes to an end and asset reallocation at the end of the month is completed, there has been a noticeable uptick in inflows into the US money market funds. According to data released by the Investment Company Institute on Thursday, in the week ending May 6, US money market funds attracted approximately $122 billion in inflows, the largest single-week increase since April 2020, putting an end to the previous three-week trend of outflows. The data shows that the total assets of US money market funds increased from $7.626 trillion in the previous week to $7.75 trillion. April is typically a period of significant volatility for money market fund assets, as the US tax season leads to hundreds of billions of dollars flowing out of the banking system, and some investors redeem money market funds to pay taxes. In the week ending April 16, US money market funds experienced approximately $175.8 billion in outflows, marking the largest single-week outflow since records began in 2007. Before the escalation of geopolitical tensions, the market had generally expected inflows into money market funds to continue, albeit at a slower pace. Many corporate finance departments are more inclined to move funds from direct securities holdings to cash products to easily gain yields without having to manage interest rate risks themselves. At the same time, expectations for Federal Reserve policy have changed. With reports that Washington and Tehran are negotiating a memorandum of understanding to pave the way for future nuclear talks, the interest rate swap market this week has reintroduced the possibility of Fed rate cuts within the year, weakening bets on rate hikes in 2027. Detailed data indicates that in the week ending May 6, assets in government money market funds focusing on US Treasuries, repurchase agreements, and institutional bonds increased by $109 billion, reaching $6.37 trillion. Assets in prime money market funds investing in higher-risk assets such as commercial paper increased by approximately $9 billion, reaching $1.23 trillion. Against the backdrop of ongoing global geopolitical risks and continuously adjusting expectations for interest rate paths, money market funds offering stable returns and high liquidity continue to attract funds.