NEW YORK: Investors are rushing into US money-market funds, lifting total assets to a record US$8.27 trillion, as the war in Iran fuels a broad flight to safety.
Some US$49bil flowed into money-market funds in the week ending March 3, according to the latest figures from Crane Data LLC. About US$18.5bil alone came in on Tuesday as the effects of the US-Israeli strikes on Iran reverberated across markets.
The latest funds boosted this year’s inflows to more than US$162bil.
“There definitely was dash to cash,” said TD Securities strategist Jan Nevruzi, noting the decline in US Treasury yields in recent weeks. “Let’s see a few more days of flows.”
The fast‑moving conflict across the Middle East is heightening investor anxiety, and strengthening the case for haven assets, especially cash, against a backdrop of rising uncertainties.
“Let’s not forget the uncertainty pervading the Federal Reserve’s (Fed) future, the US economy and geopolitics – a collective negative vibe that often sends investors to safer harbours,” said Deborah Cunningham, Federated Hermes’ chief investment officer for global liquidity markets.
The appeal of safe-haven assets such as money-market funds grows during periods of tumult as they “exhibit low volatility, preserve principal, are extremely liquid, and diversify from more volatile investments in investor portfolios,” said Morgan Stanley strategist Martin Tobias.
Inflows into money markets had been expected to continue in 2026 with the Fed keeping interest rates on hold for now and amid higher tax refunds during the US filing season.
But the pace was expected to slow after the Fed’s interest-rate cuts last year which are reflected with a lag in money markets. Corporate treasurers also often prefer to rotate from direct securities into cash products in order to capture yield rather than grapple with it themselves. — Bloomberg
