U.S. Money Market Funds See Record Inflows Amid Tariff Concerns

U.S. Money Market Funds See Record Inflows Amid Tariff Concerns

In the week ending June 4, 2025, U.S. money market funds experienced a significant surge in inflows, totaling $66.24 billion—the highest weekly net purchase since December 2024. This substantial movement reflects growing investor caution in response to potential increases in U.S. tariffs on steel imports and ongoing trade disputes with China. Additionally, anticipation of a key employment report contributed to the shift towards safer assets. U.S. money market fund inflows surge on caution over tariffs

Investor Shift Towards Safer Assets

The substantial inflows into money market funds indicate a broader trend of investors seeking stability amid economic policy uncertainties and market volatility. In contrast, equity funds experienced sharp outflows of $7.42 billion during the same period. Notably, all segments—including small-cap, multi-cap, mid-cap, and large-cap—saw significant withdrawals. Sector-specific movements included $1.15 billion inflows into technology and $309 million into consumer staples, countered by a $1.16 billion outflow from financials.

Bond Funds and Inflation-Protected Securities

Bond funds saw decreased inflows at $4.8 billion—a four-week low—though short-to-intermediate investment-grade funds attracted $3.98 billion, the highest since November 2024. Inflation-protected and general domestic taxable fixed income funds also gained $634 million and $505 million, respectively. These figures suggest that while investors are cautious, there is still interest in fixed-income securities that offer protection against inflation.

Market Implications

The shift towards money market funds and away from equities underscores the market’s sensitivity to geopolitical developments and economic indicators. As trade tensions escalate and policy decisions loom, investors are likely to continue favoring assets perceived as safer. This trend may persist until there is greater clarity on trade policies and economic data.

For more detailed information, refer to the original report by Reuters: U.S. money market fund inflows surge on caution over tariffs

Investors are advised to stay informed and consider diversifying their portfolios to mitigate risks associated with market volatility and policy uncertainties.