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Caution over midterms and AI cash burn drives surge in US money market fund inflows

By Reuters News

Nov 6 (Reuters) - US money market funds posted their largest weekly inflow in six months in the week to November 4, as caution ahead of the US midterm elections and concerns about rising AI spending and cash burn at major technology hyperscalers boosted demand for safe-haven assets.

Investors added a net $117.97 billion to US money market funds during the week, marking the largest weekly net investment since May 6, according to LSEG Lipper data.

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US equity funds attracted $14.81 billion in net inflows, reversing the previous week's $6.54 billion net outflow, as declining energy prices and a fall in Treasury yields from their October highs supported sentiment.

Democrats won control of both the Senate and the House in Tuesday's US midterm elections, raising concerns that increased regulatory scrutiny could curb the AI sector's rapid expansion.

Those worries weighed on markets on Thursday, when the Nasdaq .IXIC, S&P 500 .SPX, and Dow Jones .DJI Industrial Average fell 5.52%, 4.36%, and 3.44%, respectively.

Investors bought a net $10.35 billion of US large-cap funds in the week, $1.64 billion of multi-cap funds, and $422.77 million of small-cap funds, while selling a net $1.07 billion of mid-cap funds.

Among US sector funds, technology, industrials, and communication services recorded outflows of $160.23 million, $624.67 million, and $965.68 million, respectively. In contrast, financials and healthcare attracted inflows of $1.3 billion and $1.09 billion, respectively.

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US bond funds secured inflows worth a net $7.31 billion, the highest in four weeks.

General domestic taxable fixed-income funds and longer-maturity government and Treasury funds recorded significant inflows of $2.72 billion and $2.66 billion, respectively. Investors also bought $794.32 million worth of short- to intermediate-term government and Treasury funds.

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