The U.S. money market funds received their biggest inflows since December 2019 during the last week because investors sought safe assets because of rising trade tensions and upcoming employment data. The LSEG Lipper data shows money market funds received $66.24 billion in net purchases during the week ending June 4 which represents the largest weekly amount since December 2019.
The market has become more cautious because President Trump initiated new trade disputes which included steel import tariffs. Riskier equity funds experienced substantial outflows which reached $7.42 billion during this week while previous redemptions totaled $5.39 billion.
Small-cap funds experienced their largest weekly withdrawal of $2.99 billion since late April which made them the most affected sector. The investment flow from multi-cap and mid-cap and large-cap funds remained significant while sector-specific funds maintained minimal activity.
The bond fund sector experienced reduced activity during the week when they received $4.8 billion in net inflows which represented their lowest amount in four weeks. Short- to intermediate-term investment-grade bond funds received $3.98 billion in investments which represented their highest amount since November. The data shows that inflation-protected bond funds received $634 million in investments while general domestic taxable bond funds received $505 million.
The data demonstrates a general trend of investors moving to safer assets because of trade concerns while they wait for the jobs report on Friday to understand economic developments better. The market’s fragile state becomes evident through money market fund inflows while investors continue to seek lower-risk investments.
