The Fed's abrupt pivot has made currency-holding investors eager to try the market.
Bank of America said in a report released FridayInvestors withdrew $31 billion from currency** and poured $25.3bn into it** this week, the first outflow from the currency** market in eight weeks. According to the Investment Company Association, total assets of the currency reached a record 59 trillion dollars.
The market is closely watching the movement of this nearly 6 trillion currency**, because once this part of the money flows in**, it will further push US stocks higher.
Since the Federal Reserve began one of its most aggressive tightening cycles in decades last year, investors have been pouring into the currency to "eat interest". But on Thursday, the Federal Reserve talked about cutting interest rates for the first time at its interest rate meeting, releasing a first signal.
According to BlackRock data since 1995, in the year since the Fed's last rate hike, money** returns have averaged 45%, investment grade bonds** 136%，And the United States *** 243%。
Recent market movements suggest that the investment landscape may have shifted. Since Thursday's Fed meeting, the yield on the 10-year Treasury note, which is the opposite of bonds, has been around 24 basis points to 39,153%, the lowest level since the end of July.
At the same time, the S&P 500 has reached **16%, less than 2% below its all-time high, and the index is up nearly 23% this year.
"If you think the Fed's rate hike cycle is over, now is the time to deploy money because the opportunity is there," said Fl IO Carpenzano, director of fixed income investments at Capital Group, as quoted as saying. ”
However, some investors believe that the market may see some funds flowing out of the currency to chase the US stocks, but will not see large-scale outflows of funds or even trillions of dollars.
Adam Turnquist, chief technical strategist at LPL Financial, said history has shown that most of the money in the currency** tends to remain even when the benchmark interest rate falls.
Peter Crane, president of Crane Data, which tracks currency**, said some of the funds were held by institutions that were used for cash purposes and that they would have kept the funds in banks.
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