Investors are flocking to the relative safety of money market funds at the highest level since the financial crisis-era collapse of Lehman Brothers in 2008.
The industry has pulled in $322 billion over the past six months, the fastest pace since the second half of 2008, bringing assets to nearly $3.5 trillion, according to data from FactSet and Bank of America Merrill Lynch.
On the bright side: That was a period which preceded the buying era of a lifetime for stock market participants. In March 2009, Wall Street kicked off a bull market, still intact, that would break records for longevity.
“You could be contrarian and say [the money market flow is] positive, because if the market actually steadies itself and there’s a detente [in the trade war], that money’s going to go back into the equity market,” said Quincy Krosby, chief market strategist at Prudential Financial. “From a contrarian standpoint, it would be helpful.”
Total money market assets assets are now at their highest level since September 2009.
The funds have seen inflows every month this year except for April, with assets growing nine of the past 10 weeks as the stock market has wrestled with myriad issues, primarily involving the trade dispute with China and lingering worries that the U.S. is heading toward a possible recession.
Facing a constant drumbeat of headline risk, investors have headed to the mattresses as a way protect cash until the storms clear.
“There’s been enough headlines, whether you’re talking politics, trade concerns or whether or not we’re heading into recession for the money to go into those markets,” Krosby said.
Stocks, in fact, have been on a roller coaster for the past year, tumbling at signs of a break in the U.S.-China talks then rallying on any ray of hope. The Dow Jones Industrial Average surged more than 400 points Friday on some positive sentiments out of the White House that this week’s trade talks could yield fruit.
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