BofA's Hartnett: Money Market Funds See $166.4B Weekly Inflow, Largest Since Pandemic
nashnova research
In the week ending October 7, $166.4 billion flowed into money-market funds — the largest single-week inflow since April 2020; Hartnett says this cash will not leave until the Fed stops hiking.
$166.4 billion into cash — how unusual is this?
Money-market funds drew a net $166.4 billion in a single week, the highest since the April 2020 pandemic panic.
This means → investors are moving into cash at the fastest pace in three and a half years, with risk aversion approaching early-pandemic levels.
In plain terms = the most cautious money in the market is voting with its feet — park in cash first, ask questions later.
When will this cash come back out?
Hartnett wrote in his report: "No rate cuts, no cash redeployment."
Historically, large-scale cash hoards unwind only alongside significant monetary easing.
This means → as long as the Fed remains on a hiking path, this $166.4 billion is likely to stay parked and will not rotate back into equities.
More hikes ahead — what is the bond market pricing in?
The bond market currently expects three more Fed rate hikes by late July, with the next one likely at the December meeting.
Bonds attracted $33.8 billion in net inflows over the same week; equities drew just $12.4 billion — a clear tilt toward fixed income.
This reflects a widening competitive edge for bonds and cash over stocks while rates keep rising and inflation pressure persists.
What is Hartnett's outlook for equities?
He holds a defensive stance on stocks through 2027.
He flags the 2026 U.S. midterm elections as the most likely trigger for a major equity volatility event.
In plain terms = in his framework, the window for an offensive allocation has not opened yet — and may not for another one to two years.
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