Bloomberg analyst: S&P 500 and MMF rise in tandem, market has ample "ammunition" but may need a rate cut to trigger entry

Deep Tide TechFlow News: On June 29, Bloomberg senior ETF analyst Eric Balchunas posted on X that the S&P 500 index is currently at historic highs, while money market fund (MMF) assets have also reached new records. This “stocks and cash coexist at elevated levels” structure stands out starkly as a contrast, but for long positions it means there is still a large amount of “dry powder” that has not yet entered the market.

Eric Balchunas believes that funds flowing back into the stock market may only happen meaningfully if interest rates fall below 3%, because in the current 4% yield environment, investors are more inclined to hold money market funds with stable net asset values and no drawdown risk, rather than bond ETFs. The bond market’s sharp drawdown in 2022 weakened investors’ trust in traditional bonds, leading money market funds to partially replace traditional bond allocations to a certain extent. In addition, U.S. macroeconomic uncertainty (including factors related to Trump’s policies) has also intensified investors’ wait-and-see sentiment.