The market is paying attention to the movement of nearly $6 trillion in cash parked in money funds. Once these silver bullets flow into the stock market, it is bound to trigger a new wave of bullish gains in U.S. stocks. (Schematic diagram/Dazhi Image)
[周刊王CTWANT] The bullish sentiment from Federal Reserve Chairman Jerome Powell’s unexpected switch to a dovish stance continued, with major U.S. stock indexes closing higher for the seventh consecutive week, and the S&P 500 setting a record for its longest streak of gains in six years. The market is currently paying attention to the movement of nearly $6 trillion in cash parked in money funds, because once these silver bullets flow into the stock market, they are bound to trigger a new wave of bullish gains in U.S. stocks.
Although the excitement in the market gradually faded on the 15th, causing U.S. stocks to close mixed, the Dow Jones Industrial Average set a new closing high for three consecutive days, rising 0.15% to 37,305.16 points, and the Nasdaq Index also rose 0.35% to close at 14,813.92 points. As for the S&P 500, it fell slightly by 0.01% to 4,719.19 points.
However, in the past week, the Federal Reserve (Fed) hinted at a policy shift, and the three major indexes closed higher for the seventh consecutive week, with gains ranging from 2.5% to 2.9%. The S&P 500 index even set a record for its longest consecutive rise in six years. .
In addition, the price of 10-year U.S. Treasury bonds has also followed up and surged, pushing down the yield that is opposite to the price trend. In the past week, the yield fell 31.7 basis points to 3.913%, falling below the 4% mark and recording the largest weekly decline since November last year.
However, whether the U.S. stock market can continue this blazing rally, the market is currently focusing on the movement of nearly $6 trillion in cash parked in money funds. If some of the funds are diverted to the stock market, and the capital market is ignited, it is bound to trigger a new wave of U.S. stocks again. Rally.
According to a report released by the Bank of America on the 15th, investors withdrew US$31 billion from money funds over the past week and invested US$25.3 billion into the stock market. This was the first outflow of funds from money funds in eight weeks. The latest statistics from the American Association of Investment Companies show that the scale of monetary funds reached a record high of $5.9 trillion on December 6.
Since the Fed first mentioned interest rate cuts at its meeting last week, the entire investment situation has changed. BlackRock tracked data since 1995 and found that in the year after the Fed ended its interest rate hike cycle, U.S. stocks returned 24.3%, investment-grade bonds returned 13.6%, and money funds returned only 4.5%.
Flvio Carpenzano, head of fixed income investment at Capital Group, said that if the Fed’s interest rate hike cycle is over, now is the time to deploy cash.
However, Peter Crane, president of Crane Data, believes that not all cash has chosen to chase the rebound in U.S. stocks and bonds. Some funds are held by institutional investors, who will instead deposit them in banks for cash purposes.
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2023-12-16 22:52:30
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