Investors Park Record $7.7T in Money Markets Despite Fed Beginning Rate Cuts

Cash has become king, and investors are treating their throne like Fort Knox. According to Crane Data, money market funds now hold $7.7T, with more than $60B pouring in during just the first four trading days of September. Even as the Fed kicks off its rate-cutting cycle, savers have kept piling into cash while showing zero urgency to chase riskier investments.

• Money market funds currently deliver a 4.1% seven-day annualized yield, outpacing the measly 0.6% national average for traditional savings accounts.
• Roughly 60% of money market assets now come from institutions, while individual investors still keep cash allocations above pre-2022 levels.

Wall Street’s wishful thinking: The legendary “wall of cash” theory — that rate cuts would unleash floods of money into equities — has been debunked repeatedly. Historical data shows these funds only saw significant outflows during economic catastrophes like the dotcom crash and financial crisis, when rates collapsed to zero. Even if rates fall to 3%, the spread over bank deposits is still compelling enough to keep most investors on the sidelines. As Crane Data president Peter Crane put it, this cash cushion “is not going anywhere but up” — and Wall Street should “dream on.”