US Investors Grab Money Market Funds Amid Slowdown Fears – Reuters

U.S. investors made a significant shift into money market funds for the week ending August 7, moving away from riskier assets amid a stock market decline driven by concerns over an economic slowdown.

Data revealed that investors introduced a substantial $47.48 billion into U.S. money market funds, marking the largest weekly inflow since April 3. In contrast, they withdrew $7.39 billion from equities, thus ending a three-week streak of net purchases.

The previous week saw a disappointing U.S. payroll report and weak manufacturing data, raising alarms about the economy’s strength and contributing to the further decline in stock markets.

In the realm of small-cap funds, investors pulled out $2.42 billion, breaking a three-week trend of net buying. Mid-cap and multi-cap funds experienced outflows of $400 million and $382 million, respectively, while large-cap funds gained $1.68 billion in net purchases.

Sector-wise, financials faced a notable outflow of $1.36 billion, as investors turned net sellers following three weeks of net buying. Additionally, the technology and communication services sectors also saw significant withdrawals, amounting to $657 million and $521 million, respectively.

Demand for U.S. bond funds also waned, with inflows of just $452 million, the lowest in ten weeks. Investors also sold off $3.07 billion in loan participation funds, registering the largest weekly net sales since at least October 2020. Conversely, short/intermediate investment-grade and municipal debt funds saw inflows of $1.31 billion and $674 million, respectively.