---
title: "\"In anticipation\" of the Fed's rate cut in September, investors flock to money market funds"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/212430466.md"
description: "U.S. investors poured $37 billion into money market funds in the week ending Wednesday to prepare for the Fed's rate cut in September. Bank of America pointed out that this may create the largest three-week capital inflow since January, totaling $145 billion. According to market reports, investors allocated $20.4 billion, $15.1 billion, and $1.1 billion to the stock market, bonds, and gold respectively. Analysts believe that the rate cut may bring more cash inflows rather than directly driving large-scale stock purchases. Fed Chairman Powell has hinted that the time to adjust policies has come"
datetime: "2024-08-24T06:50:03.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/212430466.md)
  - [en](https://longbridge.com/en/news/212430466.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/212430466.md)
---

> Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/212430466.md) | [繁體中文](https://longbridge.com/zh-HK/news/212430466.md)


# "In anticipation" of the Fed's rate cut in September, investors flock to money market funds

According to the Zhitong Finance and Economics APP, Bank of America stated on Friday that investors poured $37 billion into money market funds in the week ending Wednesday, preparing for the Fed's rate cut in September.

Citing data from the financial data provider EPFR, Bank of America mentioned that this indicates that money market funds are expected to see the largest three-week cumulative inflow since January, reaching $145 billion.

Based on Bank of America's weekly global market fund inflow and outflow report, investors allocated $20.4 billion to the stock market, $15.1 billion to bonds, and $1.1 billion to gold.

Many fund managers hope that the rate cut will lower the returns of money market funds and drive a large amount of funds into the stock and bond markets.

However, large investors typically flock to money market funds before the Fed cuts rates, as these funds offer a variety of short-term fixed income securities, often providing higher long-term returns than short-term U.S. Treasuries.

"A rate cut is unlikely to trigger a stock buying frenzy in the $6.2 trillion money market fund sector," said Jared Woodard, a strategist at Bank of America.

"History shows that in a 'soft' landing scenario, the first rate cut by the Fed brings in more cash inflows, while in a 'hard' landing, bonds may be the winners."

Overall, recent economic data indicates that the U.S. economy is slowing gradually, a "soft landing," rather than a more severe "hard landing."

Bank of America and EPFR data show that investment-grade bonds attracted $8.1 billion in funds, marking the 43rd consecutive week of inflows.

Emerging market stocks attracted $4.7 billion in funds, marking the 12th consecutive week of inflows, the longest inflow period since February 2024.

It is reported that Fed Chairman Powell sent the strongest rate cut signal to date at the Jackson Hole Global Central Bank Annual Meeting on Friday, stating that "the time for policy adjustment has come."

Considering cooling inflation and normalization of the labor market, a rate cut in September by the Fed is almost certain. CME Group's FedWatch data shows a 100% probability of a rate cut in September, with a 67.5% probability of a 25 basis point cut and a 32.5% probability of a 50 basis point cut

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