Money Markets See Biggest Inflows Since 2013 in Run for Cash

(Bloomberg) -- Investors poured the most cash since October 2013 into global money markets on the heels of trade tensions and turmoil in developing economies.

At $45 billion, U.S. funds were the biggest beneficiaries of the $55 billion inflow in the week through June 6 -- the second-highest on record -- according to EPFR Global. Allocations into U.S. inflation-protected bond vehicles also hit their highest since the fourth quarter of 2016, according to the data provider.

“With the global growth story losing some of its shine, tariff-related rhetoric increasing in volume and a populist government taking office in Italy, investors opted for liquidity in early June,” Cameron Brandt, director of research, wrote in a note. European equity and emerging-market fixed income were big losers.

Woes in developing economies and trade frictions were on full display this week, with Friday’s G-7 meeting in Quebec underscoring President Donald Trump’s isolation on the international stage, creating a more complex outlook for market risk.

Money managers can also snap up positive real returns on cash-like instruments in the U.S., effectively for the first time since the crisis. Three-month U.S. Treasury bills yield about 1.9 percent, up from 1.4 percent at the start of the year.

Still, EPFR data suggest bullish sentiment endures. U.S. equity funds extended their longest inflow streak since the fourth quarter of 2017, taking in about $1 billion overall, and Chinese bond funds saw the highest allocation in over 17 months.

“Investors did respond -- cautiously -- to some of the bright spots in the global growth picture,” said Brandt.

--With assistance from Eric Lam.

To contact the reporter on this story: Cormac Mullen in Tokyo at cmullen9@bloomberg.net

To contact the editors responsible for this story: Christopher Anstey at canstey@bloomberg.net, Sid Verma, Yakob Peterseil

©2018 Bloomberg L.P.