Investors poured $37 billion into cash-like money market funds (MMFs) in the week to Wednesday, Bank of America (BAC) said on Friday, as they braced for the US Federal Reserve to cut interest rates in September.

It put MMFs on track for their biggest three-week cumulative inflow since January at $145 billion, BofA said, citing figures from financial data provider EPFR.

Investors put $20.4 billion into stocks, $15.1 billion into bonds, and $1.1 billion into gold, BofA said, in its weekly round up of flows in and out of world markets.

Many fund managers hope rate cuts will lower the returns on MMFs and cause a rush of cash into stocks and bonds.

Yet big investors typically flock to money market funds before the Fed cuts rates, as the range of short-term fixed income securities in the funds means they tend to offer higher returns for longer than short-term Treasury bills.

“Rate cuts not a likely spark for equity buying from the $6.2 trillion money market fund (sector),” BofA strategists, led by Jared Woodard, wrote.

“History shows the first Fed cut precedes more cash inflows in a ‘soft’ landing, and bonds the likely winner if ‘hard’.”

Recent economic data, broadly speaking, has pointed to a gradual economic slowdown, or ‘soft landing’ as opposed to a more dramatic ‘hard’ alternative.

BofA and EPFR’s data showed investment grade bonds drew their 43rd straight week of inflows at $8.1 billion.

Emerging market equities received $4.7 billion in their 12th straight week of inflows, the longest streak since February 2024.

(Reporting by Harry Robertson, editing by Alun John and Dhara Ranasinghe)