Chamath Palihapitiya Flags Rising Investor Fear As Money Market Fund Assets Hit $7.24 Trillion: 'Market Is Risk-Off'

Billionaire investor Chamath Palihapitiya is sounding the alarm on an ominous new sign for the markets, hinting at a major shift in sentiments over the past couple of weeks.

What Happened: On Monday, in a post on X, Palihapitiya posted saying that the “market is risk-off,” while quoting a post by Barchart, showing a staggering rise in the assets held by money market funds, at $7.24 trillion, “a new all-time high.”

Investors develop a penchant for money market funds, or cash equivalent funds, during periods of heightened market and economic turmoil. The spike in these assets underscores growing investor caution amid persistent macro uncertainty and shifting rate expectations.

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In a one-line post, Palihapitiya contends the same, that investors are fleeing riskier assets such as stocks, in favor of safer, yield-generating instruments, waiting for the dust to settle.

According to KoyFin Charts, whose data was cited by Barchart, which was in turn quoted by Palihapitiya, there has been a sharp rise in inflows for money market funds, starting in 2022, when the Federal Reserve began its aggressive rate hikes, resulting in significantly higher yields for investors.

Why It Matters: While this is seen as a sign of anxiousness among investors, market observers such as The Market Ear believe that these funds are just “dry powder,” or cash reserves that will make their way back into the markets after getting the right signal.

At $7.24 trillion, this marks a significant increase in assets over the past week alone, with the Investment Company Institute reporting $6.97 trillion in total money market assets during the week ending 21st May.

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