Stocks Are at Record Highs — and So Is the Cash Sitting on the Sidelines

The stock market keeps hitting records.
So does the mountain of cash sitting outside it.
U.S. money-market fund assets remain near record highs, with investors still earning roughly 3.5% while taking very little market risk.
Cash-like holdings now represent almost 4.5% of U.S. household wealth, up from roughly 3% before the last major rate-hiking cycle.
That creates an interesting setup.
As long as cash yields remain attractive, investors have little urgency to move that money into risk assets.
But if the Fed eventually drives short-term yields materially lower, some of that capital could start searching for higher returns in stocks, bonds and other assets.
The record cash pile is not guaranteed “dry powder” for equities.
But when the yield on sitting still finally breaks, trillions of dollars will have to reconsider where they want to live.