As the banking system faces uncertainty, investors are rushing to cash at the quickest rate since the pandemonium of the early days of the COVID-19 pandemic.
Bank of America researchers, led by Michael Hartnett, said in a note that there has been an enormous wave of inflows into cash funds across the world following the collapse of Silicon Valley Bank and the absorption of Credit Suisse into UBS. The team also predicts that credit and equity markets will falter in the next few months.
“Credit and stock markets too greedy for rate cuts, not fearful enough of recession,” the researchers said, according to Bloomberg.
Global cash funds had inflows of a whopping $300 billion over the past month and in just the week ending on Wednesday alone, inflows were nearly $143 billion. Assets in money market funds have grown to more than $5 trillion, which is the highest level in recorded history.