Oct 11, 2019

Investors sell stocks and hide cash in money market funds

Data: Investment Company Institute; Chart: Andrew Witherspoon/Axios

Investors moved an additional $20.2 billion into money market funds last week, while pulling $13.8 billion out of equity funds, data from the Investment Company Institute shows.

Why it matters: The increased desire for money market funds, which are ostensibly savings accounts, has come as yields on the 10-year Treasury note fell from 2.51% on April 3 to 1.59% on Oct. 2, showing it's fear rather than greed driving fund flows.

  • It's the continuation of a trend that has been in place all year and accelerated in the second and third quarters.

Details: Year to date, investors have moved $424 billion into money market funds, $361.5 billion of which has been deposited over the last 6 months. Conversely, $154.1 billion has been drained from equity mutual funds and ETFs in 2019, with $136.9 billion of outflows coming in the past 6 months, according to ICI's data.

  • More than $3.5 trillion currently sits in money market funds, the most since 2009.

Go deeper: Investors are missing out on the stock market rally

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It could be a wild week for the stock market and economic reports

Photo: Drew Angerer/Getty Images

This week will set the table for the fourth quarter in what's been a wild and highly unusual year. The stock market has risen more than 20% in 2019, but that's largely been because of a recovery from December's selloff in the first quarter.

The big picture: "Everybody’s squared up" in anticipation, says Ellis Phifer, market strategist at Raymond James. But this week has the potential for "all hell to break loose."

Go deeperArrowOct 28, 2019

Bank heads warn of looming liquidity crisis

Ron O'Hanley, president and chief executive officer of State Street Corp., at a House Financial Services Committee hearing on April 10, 2019 in Washington. Photo: Alex Wroblewski/Getty Images

A growing number of market analysts are voicing concerns that the repo market shock in September may have been the first signal of a wide-ranging liquidity shortage, and now those warnings are being echoed by the heads of major banks.

The state of play: "Despite the fact that bank balance sheets are quite strong, I think you’ll see more moments like this going forward," Ron O'Hanley, president and CEO of State Street, said during the Institute of International Finance's annual membership meeting on Saturday.

Go deeperArrowOct 21, 2019

Hedge funds see 6th consecutive quarter of outflows

Adapted from eVestment; Chart: Axios Visuals

Hedge funds saw overall negative returns for the second month in a row in September and investors continued to pull their money out, data from research firm eVestment shows.

Why it matters: It’s the latest piece of negative data for an industry that appears to have its best days behind it.

Go deeperArrowOct 29, 2019