TechFlow reports that on June 29, Bloomberg Senior ETF Analyst Eric Balchunas posted on X platform stating that the current S&P 500 index is at a historical high, while money market funds (MMF) assets have also reached a new high. This structure of "stock market and cash both at high levels" forms a sharp contrast, but for bulls it means there is still a large amount of "dry powder" yet to enter the market.
Eric Balchunas believes that capital flowing back into the stock market may require interest rates to fall below 3% to occur significantly, because in the current 4% yield environment investors are more inclined to hold money market funds with stable net value and no drawdown risk, rather than bond ETFs. The bond market's significant drawdown in 2022 previously weakened investors' trust in traditional bonds, leading money market funds to replace traditional bond allocations to some extent. Additionally, U.S. macro uncertainty (including Trump-related policy factors) has also intensified the wait-and-see sentiment of capital.
