U.S. Money Market Funds See Massive Inflows Amid Caution

(Reuters) – U.S. money market funds experienced significant inflows in the week ending October 2, as investors opted for safer assets in light of concerns ahead of a key payrolls report and ongoing geopolitical tensions in the Middle East.

They attracted a net $41.32 billion during the week, following approximately $113.11 billion in net purchases the previous week, according to LSEG Lipper data.

A stronger-than-expected non-farm payrolls report released on Friday alleviated concerns about the U.S. labor market and tempered expectations for a larger Fed rate cut in November.

Additionally, U.S. equity funds saw an impressive $30.8 billion in inflows during the week, marking the largest sum since at least December 2020.

Large-cap equity funds contributed significantly with $35.49 billion, the highest inflow since January 2019. Conversely, U.S. investors pulled out of mid-cap, multi-cap, and small-cap funds, with net divestments of $1.94 billion, $1.72 billion, and $1.31 billion, respectively.

In terms of sectoral funds, real-estate, utilities, and industrial sectors attracted inflows of $461 million, $356 million, and $321 million, respectively. Meanwhile, healthcare and financial sectors faced net selling of $919 million and $537 million.

The demand for U.S. bond funds diminished, registering the lowest inflow in four weeks, at around $2.8 billion in net purchases. U.S. short-to-intermediate government and treasury funds saw net sales of $5.03 billion after three consecutive weeks of inflows.

Investors also bought short-to-intermediate investment-grade funds, municipal debt, and general domestic taxable fixed income funds, amounting to $3.6 billion, $1.88 billion, and $852 million, respectively.