Huge Global Inflows to Money Market Funds on Tariffs Caution

Investors poured more than $158 billion into global money market funds in the week up to January 8, according to LSEG Lipper data, which said it was the second largest weekly net increase since April 2020.

The moves have been spurred by concern over potential tariff increases with the change of government looming in the United States.

Investors also appear to be exercising caution ahead of a critical jobs report that could reshape expectations for Federal Reserve rate cuts.

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US President-elect Donald Trump, who is due to take office on January 20, has pledged to impose a 10% tariff on all global imports to the US. He has also threatened to implement a 25% tariff on imports from Canada and Mexico on his first day in office.

Global equity funds secured inflows for a third successive week, reaching a net $11.36 billion.

European equity funds received a net inflow of $8.7 billion, the largest in three weeks. Meanwhile, investors added a net $5.6 billion to Asian funds but withdrew a net $5.05 billion from US funds during the same period.

Global sectoral equity funds witnessed the first weekly net purchase in five weeks, to the tune of $526.24 million.

Investors pumped $1.13 billion into the technology sector following five straight weeks of net selling. The communication services sector saw a net $413 million worth of purchases.

Global bond funds also saw significant activity, receiving $19.5 billion, the second inflow in the past four weeks. Government bond funds alone attracted $1.94 billion, their second influx in six weeks, and loan participation funds gathered $2.24 billion.