$117.97 billion flows into US money market funds in election week
Key Facts
Investors added a net $117.97 billion to US money market funds in the week ended November 4, the biggest weekly inflow in six months and the largest net investment since May 6, according to LSEG Lipper data cited by Reuters. The flows came in the week after the US midterm elections, held on Tuesday, not before them. Reuters linked the appetite for assets described as safe havens to election-related caution, as well as concerns over rising spending by big technology companies on artificial intelligence and the associated cash drain. The agency said those concerns bolstered demand for safe assets, while the election result raised concerns about regulatory scrutiny of the sector. Fund data show the scale of flows recorded during the week, while the report attributed investors' moves to a range of political and sector-specific concerns.
Democrats won control of both the Senate and House in Tuesday's elections, according to Reuters. The agency said the result raised concerns that tighter regulatory oversight could curb the AI sector's rapid expansion. That concern coincided with investors' focus on rising AI spending and cash drain at big technology companies. Against the backdrop of the election debate, Morgan Stanley identified fiscal policy, AI and data centers, and government funding and debt ceiling negotiations as issues that could come to the fore in markets after the election. The firm noted that US debt exceeded $40 trillion for the first time in August 2026 in its analysis ahead of the vote.
Despite the large inflow into cash instruments, US equity funds recorded net inflows of $14.81 billion in the same week, reversing net outflows of $6.54 billion the previous week, Reuters reported. The agency attributed the improvement in sentiment to lower energy prices and Treasury yields falling from their elevated October levels. Within equities, large-cap funds drew $10.35 billion, multi-cap funds $1.64 billion and small-cap funds $422.77 million. By contrast, mid-cap funds recorded net sales of $1.07 billion. Overall net buying of equities therefore coincided with a clear divergence among company-size categories.
Flows also varied across sectors: technology funds recorded net outflows of $160.23 million, while $624.67 million flowed out of industrial funds and $965.68 million out of communication services funds, according to data cited by Reuters. In the opposite direction, financial sector funds attracted $1.3 billion and healthcare funds drew $1.09 billion. Among listed stocks, Wall Street indexes fell on Thursday, November 5: the Nasdaq dropped 5.52%, the S&P 500 fell 4.36% and the Dow Jones Industrial Average lost 3.44%. Reuters linked market pressure to concerns about regulatory scrutiny after the election result. The Associated Press reported that on Thursday the Nasdaq was 11% below its all-time high, amid concern that data center construction would slow as borrowing costs rose.
Bond markets also saw inflows: US bond funds received a net $7.31 billion, their highest inflow in four weeks, Reuters reported. General domestic taxable fixed-income funds attracted $2.72 billion, while longer-term government and Treasury bond funds drew $2.66 billion. Investors also bought $794.32 million of units in short- to intermediate-term government and Treasury bond funds. These figures show flows broadening alongside money market funds, while equity flows remained uneven across categories and sectors. The divergence appeared not only in the direction of money but also in the gap between overall equity inflows and outflows from technology, industrial and communication services funds.
Investors will next focus on the minutes of the Federal Open Market Committee's October meeting, scheduled for release on November 18, according to the Federal Reserve's calendar. The minutes may provide further details on policymakers' views, as the official schedule describes the release. The publication follows a week of large inflows into money market and bond funds, alongside a return of money to US equity funds. It also coincided with losses in US indexes and concerns about regulatory scrutiny of the AI sector. The Federal Reserve set November 18 as the release date for the minutes of its October 27-28 meeting.