This mountain of money is waiting for the “all clear” from the markets. It tends to return to the market in waves, driving it higher.
“Davidson” submits:
Retail Money Funds post new record, $2.183 Trillion. The historic relationship between the SP500 is that investors rush to money funds when they perceive high risk in the equity markets and this has been typically at market lows. As shown in SP500 vs Retail Money Funds. Retail Money Funds have continued to rise even well after the SP500 has made its recession induced low as investors are not convinced, they should return to equities till there has been a considerable rise in equities before they do. One of the difficulties in making a simple interpretation this time has been the institutions driving the SP500 higher by overpricing the Mag 7 issues as a recession play. Another complication has been T-Bills, the basis for most money funds, offered rates as high as 5.5% for a period and still offer 4.3% which is well above inflation which drew funds away from banks still paying very low rates.
