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Dry powder

2023 has been an excellent year for equity markets and risk assets in general. But due to uncertainty and fear on the US banking system after the collapse of #svb, the possibility of a recession, the conflicts in #ukraine and #israel and the high risk free rate the Fed has created to fight inflation, Money Market funds have reached almost $6Tn. As the Fed prepares to start the rate cutting cycle on 2024, where will that money go? There is a stable mass of $2-3Tn that may remain in Money market, but will the other $3Tn be invested? Is so, will that money be invested in bonds to take advantage of #ratecuts or will it be invested in the equity market? Will investors overcome the risk aversion of investing in an electoral year? It is a very bullish signal to have that amount of dry powder to invest but it may take time to put a significant portion of that money to work.

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