2023 has been an excellent year for equity markets and risk assets in general. But due to uncertainty and fear on the US banking system after the collapse of #svb, the possibility of a recession, the conflicts in #ukraine and #israel and the high risk free rate the Fed has created to fight inflation, Money Market funds have reached almost $6Tn. As the Fed prepares to start the rate cutting cycle on 2024, where will that money go? There is a stable mass of $2-3Tn that may remain in Money market, but will the other $3Tn be invested? Is so, will that money be invested in bonds to take advantage of #ratecuts or will it be invested in the equity market? Will investors overcome the risk aversion of investing in an electoral year? It is a very bullish signal to have that amount of dry powder to invest but it may take time to put a significant portion of that money to work.
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