Investors flock to the safest haven assets - money market funds! The size of money market funds in the United States has risen to a record $8.27 trillion.

With the military conflict between the United States/Israel and Iran triggering a widespread flight to safety wave globally, the market is embracing the hardest core and most direct, lowest risk preference for cash type safe haven that is, investors are pouring into US currency market funds crazily, pushing the total assets of US money market funds to a record high of $8.271 trillion. According to the latest data from Crane Data LLC, a total of $49 billion flowed into money market funds in the week ending March 3. Of these, approximately $18.5 billion flowed in only on Tuesday, and the pessimistic narrative brought about by larger-scale airstrikes between the US and Israel against Iran continued to ferment in the financial markets. The funds flowing into the money market in the past week have pushed the total inflow so far this year to over $162 billion. "There is no doubt that there has been an influx into cash," said Jan Nevruzi, Senior Strategist at TD Securities, adding that the downward trend in US Treasury yields in recent weeks should also be taken into account. "Let's see the flow of funds in the coming days." As shown in the figure above, the assets of US money market funds have expanded to a record $8.27 trillion. The rapidly escalating military conflict in the Middle East is exacerbating investor anxiety and uncertainty in the macroeconomic backdrop, driven by rising oil and natural gas prices, strengthening the rationale for allocating safe haven assets especially the attractiveness of cash assets preferred by low-risk investors. "Don't forget, the future monetary policy direction of the Fed under Powell, the US economy, the expansion of the US budget deficit, and the uncertainty pervading geopolitics usually steer investors towards safer havens," said Deborah Cunningham, Global Liquidity Market Chief Investment Officer at Federated Hermes. In periods of market turmoil, safe haven assets like money market funds are often more attractive because they are "low volatility, can preserve capital, highly liquid, and can diversify risks in a portfolio of higher volatility investments," said Martin Tobias, Senior Strategist at Morgan Stanley. Many strategists had originally predicted that the inflow of funds into US money markets would continue to increase in 2026, primarily due to the Fed's firm stance on keeping interest rates unchanged and the higher tax refunds expected during the US tax season. However, following the Fed's resumption of rate cuts last year, the pace of fund inflows has slowed significantly at the beginning of this year due to the lagged response of money markets to rate changes. Corporate treasury managers also tend to shift funds from direct holdings of securities to cash products during periods of increased macroeconomic uncertainty to obtain fixed income, rather than dealing with these asset allocation issues themselves. "I am sure some of it can be attributed to the rise in safe haven sentiment and the inflow of funds into high-quality low-risk assets," said Steven Zeng, a strategist at Deutsche Bank. "But I would also like to point out that we are in the middle of the tax season, and money market funds are expected to benefit significantly from the tax refund events." Deutsche Bank pointed out that this year's tax refunds are approximately 10% higher, boosting the inflow of funds from investors. Taxpayers expecting refunds tend to file their tax returns earlier, and the cash received will flow back into money market funds. Generally, outflows from money market funds are not observed until March and April, as those individuals who need to pay taxes will wait until close to the April 15 deadline to submit their returns. Usually, tax refunds first return to residents' accounts as "cash," and at the same time, these refund amounts and many corporate cash management accounts tend to park this kind of short-term idle funds in money market funds first, rather than immediately buying stocks. Money market funds are typical cash management tools: the core characteristics summarized by the US SEC and the ICI organization are low volatility, preservation of capital, high liquidity, suitable as a "berth" for funds. Many investors who receive tax refunds often prioritize keeping the cash for emergencies, waiting for tax settlement, paying bills, paying off debts, or temporarily parking them, rather than immediately experiencing stock market fluctuations; especially in the current environment of escalating conflicts in the Middle East, uncertain monetary policy trajectory of the Federal Reserve and the US economic outlook, funds often return to the "cash pool" first and then determine the next step, in this environment, the attractiveness of cash assets is stronger.