Investors worldwide are turning to short‑term, low‑risk cash‑like vehicles as geopolitical and inflation concerns rise. According to LSEG Lipper data, global money‑market funds attracted a net $46.1 billion in the week through September 2, the biggest weekly inflow since August 5.
Why cash is back in favor
The surge follows a series of escalations between the United States and Iran, including U.S. strikes on Iranian military targets near the Strait of Hormuz and Tehran’s claim of targeting U.S. assets across the region. The conflict pushed Brent crude to a near‑1½‑month high of $97.62 a barrel, stoking inflation fears.
Adding to the pressure, Federal Reserve Chair Kevin Warsh warned that the central bank would still have “work to do” if policymakers are not confident inflation is returning to the 2 % target. Those remarks helped revive rate‑sensitivity among investors, prompting a shift toward the safety of money‑market funds.
Broader market flows
Equity fund flows also turned positive, with a net $6.65 billion flowing into global equity funds, reversing a $6.13 billion outflow the week before. European equity funds saw $13.09 billion of new money, while Asian equity funds added $4.22 billion. By contrast, U.S. equity funds experienced a net withdrawal of $11.12 billion.
Sector funds recorded $2.62 billion of outflows, ending a two‑week streak of inflows into technology funds. Financial and industrial funds saw outflows of $1.35 billion and $484 million respectively.
Bond and commodity trends
Global bond‑fund inflows cooled to a five‑week low of $10.01 billion, though short‑term bond funds still attracted $7.43 billion – their strongest weekly inflow since July 8. Loan‑participation funds added $1.08 billion, while government and corporate bond funds posted net outflows of $3.34 billion and $1.41 billion.
Precious‑metal funds, led by gold, continued to draw investor interest for an eighth straight week, pulling in $2.85 billion. Energy funds, however, recorded a third consecutive weekly outflow of $232 million.
Emerging‑market activity
In emerging markets, investors extended an eight‑week streak of equity‑fund buying, adding $1.99 billion, and also placed $646 million into bond funds.
These flows reflect a broader move toward liquidity and safety as markets digest heightened geopolitical risk and lingering inflation concerns.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
