Wall Street’s predictions of a mass exodus from money market funds have fallen flat. Investors are still parking their cash in these safe havens, even with the Federal Reserve’s recent rate cuts. Money market funds just surpassed $7T for the first time — proving cash is still king in 2024. The persistent appeal of these funds indicates how attractive benchmark rates above 5% remain for investors accustomed to near-zero returns.

• Money market funds attracted $91B in the week through Wednesday, pushing total assets to $7.01T, with institutional investors accounting for about half of the $700B in inflows this year.
• Three-month Treasury bills currently yield ~4.52%, outpacing the 10-year Treasury note — with major banks like Goldman Sachs’ Marcus lowering their high-yield savings rates to 4.1%.

Fed’s steady hand: Federal Reserve Chair Jerome Powell highlighted that the robust economy allows the Fed to take a cautious approach to rate decisions, with no immediate need for cuts. With inflation just above the 2% target, investors might find themselves married to money market funds longer than anticipated. Supporting this, Invesco’s Laurie Brignac remarked, “I’m struggling to see what is going to get either institutional or retail investors out of money market funds.”