Big week for money market funds amidst financial turmoil

money market funds amidst financial turmoil, Money market money attracted extra than $120 billion, the biggest influx because in view that the COVID-19 pandemic in April 2020
The monetary turmoil of the previous week despatched buyers going for walks for safety.

They ran to cash market funds.

That fund area attracted their largest weekly inflow of money considering that the early phase of the COVID-19 pandemic, in accordance to facts stated through Bloomberg.

US money-market cash in the week up to March 15, attracted about $120.93 billion, the greatest influx when you consider that April 2020.

CREDIT SUISSE TO BORROW UP TO $54B FROM SWISS NATIONAL BANK

Fears over the fall down of Silicon Valley Bank, Signature Bank and worries surrounding Europe’s Credit Suisse, drove demand for high-quality, liquid assets.

Total property rose to $5.01 trillion, the best possible on file going lower back to 2007.

Retail cash accounted for $20.15 billion of the whole increase, whilst institutional money climbed by way of $100.78 billion.

The upward thrust was once led through authorities funds, which make investments specifically in securities like Treasury bills, repurchase agreements and corporation debt.

Big week for money market funds amidst financial turmoil

SIGNATURE BANK FACED CRIMINAL PROBE BEFORE FIRM’S COLLAPSE

The coronavirus pandemic set the weekly influx file in March 2020 at $286 billion.

After forty years, SVB, the nation’s seventeenth largest, used to be shut down by way of the FDIC a week in the past as regulators moved to shield clients as it confronted a liquidity crunch following a $2 billion loss.

It grew to become the greatest financial institution failure in view that the monetary crisis.

Federal regulators on Sunday stated New York-based Signature Bank used to be being shut down to guard buyers and the monetary device
following the crumple of SVB.

Big week for money market funds amidst financial turmoil

GOLDMAN BOUGHT THE PORTFOLIO SVB REPORTEDLY BOOKED LOSSES ON

Founded in 2001, the New York-based Signature Bank used to be famous amongst crypto companies. The group supplied savings offerings for its clients’ digital belongings however did no longer make loans collateralized via them.

Credit Suisse misplaced nearly a quarter of its price on Wednesday, shedding to a new document low after its biggest investor stated it should no longer furnish the Swiss financial institution with greater economic assistance.

On Thursday, Credit Suisse stated it would borrow up to 50 billion Swiss francs ($54 billion) from the Swiss National Bank.

WHY IT HAPPENED

The recent inflow of cash into money market funds was driven by concerns over the collapse of financial institutions such as Silicon Valley Bank, Signature Bank, and Credit Suisse. Investors sought safety in high-quality, liquid assets amid the recent financial turmoil. The fear of potential losses and liquidity crunches in these institutions led investors to withdraw their money from other investments and park them in money-market funds. Additionally, the pandemic and its impact on the economy may have contributed to investor nervousness, leading them to seek the safety of money-market funds. Government funds, which invest primarily in low-risk securities, were the most popular among investors, driving the rise in money-market assets.

WHAT WILL AFFECT

Several factors could affect the inflow of cash into money market funds going forward. Economic and geopolitical events that cause market volatility or uncertainty could lead investors to seek the safety of money-market funds. Additionally, changes in interest rates or central bank policies could also impact the demand for money-market funds. If interest rates rise, for example, investors may find other investments more attractive, leading to a potential decrease in the inflow of cash into money-market funds. On the other hand, if interest rates fall, investors may continue to seek the safety and stability of money-market funds. Overall, the inflow of cash into money-market funds will depend on a range of factors, including market conditions, investor sentiment, and economic and political events.

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