Apr 6, 2023 - Economy

Money market fund assets surge on bank jitters

Data: ICI, FactSet; Chart: Axios Visuals

Cash keeps coursing into money market mutual funds — an influx set off by the collapse of Silicon Valley Bank last month.

Why it matters: The bank collapse prompted an outflow of deposits from smaller regional banks — and plenty of that cash landed in money market funds. The shift underscores the pressure that regional lenders — big sources of investment capital in some metro areas — continue to face.

By the numbers: More than $300 billion has poured into money market funds over the last three weeks, driving the total assets invested to over $5 trillion.

Context: The shock of last month's banking panic started pushing cash to money markets for safety.

  • Also: Newly attentive depositors are likely to have noticed that average money market yields trounce those offered by bank savings accounts (4.5% vs. 0.4%).
  • As a result, cash is likely to continue moving that way for a while, according to analysts, even if the surge driven by recent bank worries starts to decelerate.

What they're saying: "Continued inflows into money market funds are quite likely, but at a slower pace," Goldman Sachs analysts wrote in a note yesterday.

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