During the week leading up to February 28, U.S. investors significantly increased their investments in money market funds, anticipating important inflation data and amid ongoing uncertainty about potential interest rate reductions. According to data from LSEG, there was a net investment of $42.54 billion into U.S. money market funds, marking the highest weekly net inflow since January 3.
Large Inflows Into US Money Market Funds Seen Ahead of Inflation Data
The anticipation was exceptionally high before the release of the core personal consumption expenditures (PCE) price index data, a crucial inflation measure closely monitored by the U.S. Federal Reserve.
The data, released on Thursday, revealed that the yearly inflation growth rate was the lowest it had been in almost three years, providing some relief to investors who had been nervous following recent consumer and producer price indices that came in above expectations.
In the same period, U.S. equity funds saw inflows of $196 million, a notable recovery from the $4.89 billion net outflow recorded in the previous week. This change in sentiment was primarily attributed to optimistic earnings forecasts from Nvidia (NVDA.O), which contributed to the improved outlook.
The technology sector, in particular, benefited from this shift, receiving $520 million in inflows, bouncing back from outflows the week before. The consumer discretionary and metals & mining sectors also attracted significant investor interest, with inflows of $262 million and $236 million, respectively.
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Investment trends showed a marked preference for U.S. growth funds, which attracted $613 million in inflows, reversing a $3.57 billion outflow from the prior week. Conversely, value funds experienced their second consecutive week of net outflows, totalling $449 million.
U.S. bond funds continued to appeal to investors for the tenth straight week, attracting $1.88 billion in net inflows. U.S. short/intermediate investment-grade funds stood out among these, drawing $2.59 billion—the largest amount in three weeks.
However, high yield and short/intermediate government & treasury funds faced net sell-offs, amounting to $450 million and $267 million, respectively.
