Money has piled into cash for two years. As of the week ended September 17, total money market fund* assets were $7.28 trillion after a $19.49 billion outflow—still massive by any standard. One week doesn’t make a trend, but the direction matters.
What could pry that cash loose? First, falling T-bill* yields. Short-term yields usually follow the policy rate with a lag; if bills drift down, the “risk-free” carry gets less compelling. Second, a steadier uptrend in stocks and improving bond total returns. If investors sense they’re being left behind, flows tend to follow. Third, calmer inflation—Friday’s core PCE* report is a key check on price pressures and the path for future cuts.
What would keep money parked? A softer job market or fresh growth scares would boost the appeal of liquidity. Also, if bills stay “high enough,” many savers will simply clip the coupon. The tell: watch weekly ICI fund flows, 3-month bill yields, and whether equity/bond ETFs* start seeing steadier inflows.
Early signs of rotation don’t require heroics—just gradual allocation shifts. For diversified stock exposure that dials down concentration risk*, some investors use equal-weight (RSP*). Others balance equity adds with investment-grade bond exposure to smooth the ride. None of this is all-or-nothing; it’s about nudging portfolios as the cash tide turns.
📚 Decoder
Concentration risk: Portfolio performance overly tied to a few large holdings.
Core PCE: Inflation excluding food and energy; Fed’s preferred gauge.
ETF: Fund trading like a stock that holds a basket of assets.
Money market funds: Funds investing in short-term, high-quality cash instruments.
RSP (Equal-weight S&P): ETF weighting all S&P 500 stocks equally.
T-bill: Short-term U.S. government debt maturing within one year.
⏱️ That’s this week’s Signal Spotlight.
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Educational only—not investment advice.