US money market vehicles drew $47.7 billion during the week that ended July 1, driving aggregate assets to a record $7.95 trillion, the Investment Company Institute reported on Thursday. The weekly inflow was the largest since the week ended June 3 and represents the seventh increase in nine weeks.
Breakdowns in the ICI data show government money market funds - which primarily hold Treasury bills, repurchase agreements and agency debt - increased by $34.1 billion to reach $6.56 trillion in assets. Prime money market funds, which allocate to commercial paper and other higher-risk short-term instruments, rose by $11.4 billion to $1.24 trillion.
The ICI figures exclude firms' internal money funds. A separate industry tracker, Crane Data LLC, which covers a broader swath of the market including internal funds, reported total money market assets of $8.326 trillion as of June 26, an increase of $14 billion from the prior week.
Market participants have shown heightened interest in cash products following signals from Federal Reserve officials that they expect policy rates to rise in the months ahead. Derivatives-based rate swaps reflected a change in probability after the latest jobs report: traders priced roughly a 20% chance of a rate increase at the July Federal Open Market Committee meeting, down from 33% before the jobs data was released. Forward pricing implied about 31 basis points of cumulative Fed rate increases by December, which equates to expectations of more than one quarter-point move overall.
Corporate treasurers are among those rotating holdings from direct securities into cash and cash-equivalent products to capture yield. That rotation into money market funds was expected to persist before geopolitical developments in the Middle East affected inflation expectations, according to the reporting.
The recent weekly surge in assets highlights both the size of the US cash management market and the sensitivity of short-term flows to changing expectations about Federal Reserve policy and geopolitical developments. Differences in reporting coverage mean headline totals vary by tracker, with ICI and Crane Data producing distinct aggregates due to whether internal funds are included.