Heavy Outflows in US, EM Equities As Investors Seek Safe Havens

Deutsche Bank analysts Keith Parker, Parag Thatte, John Tierney and Binky Chadha, in their report “Investor Positioning and Flows,” on October 11, examine investors’ recent flight to the safety of the money market.

Events driving investors to stockpile cash

In a chain of negative events comprising the May ‘taper’ threat, action in Syria, and most recently the U.S. Government shutdown, have curtailed the risk-taking tendencies of investors. The authors say investors have parked $120B in cash in money market funds since May, and this was rather similar to an earlier ‘risk-off’ event: last year’s fiscal cliff. At that time panic flows into money market vehicles touched $160B.