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Investors began to pour into money market funds before the Fed's interest rate cuts began. Bank of America released a set of data on Friday (August 23), showing that investors injected $37 billion into money market funds in the week ending Wednesday (August 21) in an attempt to prepare for the Fed's September rate cut.

Bank of America said, citing data from financial data provider EPFR, that three-week cumulative inflows into money market funds are on track to be the largest since January.

According to Bank of America's weekly summary of inflows and outflows into global markets, investors invested $20.4 billion in stocks, $15.1 billion in bonds and $1.1 billion in gold in the week ending August 21.

The latest fund movements show that some fund managers believe that the Federal Reserve’s interest rate cut will reduce the return rate of money market funds, leading to an influx of funds into the stock and bond markets.

Some large investors typically flock to money market funds before the Fed cuts interest rates because the wide variety of short-term fixed-income securities in these funds means they tend to offer higher returns than short-term U.S. Treasuries.

“History suggests that in a soft landing, the first Fed rate cut leads to more cash inflows, while in a hard landing, the bond market is likely to be the winner,” Bank of America strategist Jared Woodard and his team wrote.

Judging from recent US economic data, the overall trend is that the US economy will gradually slow down, a "soft landing" rather than a more drastic "hard landing."

Currently, investors are confident about the prospects of the Federal Reserve's interest rate cuts for the rest of the year, and people are awaiting the keynote speech by Federal Reserve Chairman Powell at the upcoming Jackson Hole annual symposium.

In addition, data from Bank of America and EPFR showed that investment-grade bonds saw inflows of $8.1 billion, marking the 43rd consecutive week of capital inflows; emerging market stocks attracted $4.7 billion in inflows in a week, marking the 12th consecutive week of net inflows, the longest period since February 2024.