From Bloomberg via Yahoo Finance, November 19:
The steady stampede into money-market funds is likely to reverse as the Federal Reserve keeps pushing down interest rates, giving investors incentive to shift cash into higher-yielding assets, according to Apollo Global Management’s chief economist Torsten Slok.
“Where will the $2 trillion added to money market accounts go now that the Fed is cutting,” Slok wrote in a note to clients on Tuesday, citing the inflow to money-market funds since the Fed began raising rates in March 2022.
“The most likely scenario is that money will leave money market accounts and flow into higher-yielding assets such as credit, including investment grade private credit.”
Slok, who warned of a such an exodus earlier this year, has stuck to his call even after investors keep piling in. The assets of such funds swelled last week to $7 trillion for the first time ever, defying speculation that investors would pull out cash once the Fed started nudging interest rates down from a more than two-decade high....
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Chasing yield, adding risk in the last six weeks of 2024 and into 2025.
As Mr. Seinfeld said, "Good luck with all that."
