Households pushed money-market balances to $5.1 trillion for a real yield under half a point

The Fed's household line covers more than retail. It counts institutional money-market funds that people hold indirectly through employers, trustees and fiduciaries, 401(k) plans among them, alongside the funds bought directly at a broker or bank ^[5]. Households hold $5.1 trillion of the $8.4 trillion in all money-market funds, about 61%, and their $579 billion annual gain is roughly 60% of the $960 billion the whole industry added ^{[3][6][23][24]}. In the most recent quarter the split shifted: the household $63 billion was 41% of the $152 billion total increase ^[26].

The series closest to a pure retail decision moves the other way. Small time deposits, CDs under $100,000, have sat near $1.5 trillion with almost no change for seven months, and they are $128 billion below their September 2024 peak ^[15][16]. The record is in the bucket that starts at $100,000, at $2.56 trillion in August after a $160 billion annual gain, and that figure includes CDs bought by money-market funds themselves ^[11].

Six-month T-bills sold at auction at an investment rate of 4.20% ^[7], and bills held at a broker on automatic rollover are similarly liquid, generally involve no fees, and can yield as much as or more than a fund after fees ^[9]. Against a money-market yield below 3.75% ^[1], the gap is at least 45 basis points, or about $23 billion a year on the $5.1 trillion households hold ^[25]. It is a ceiling estimate, since 3.75% is the top of the fund range and no household moves its entire balance.

The inflation subtraction is thinner still. CPI ran at 3.4% in August and PCE at 3.7% in July ^[10], which leaves a fund yielding just under 3.75% with 35 basis points of real return against the first measure and 5 against the second ^[22]. CDs are being offered at 4% and higher ^[17]. "Inflation isn't going back into the bottle, and for investors in low-risk instruments, such as MMFs, CDs, and Treasuries, that's a problem at current yields," Wolf Richter wrote ^[21].

Wednesday could move the yield. Traders have priced in a hike and it takes 7 of the 12 voting FOMC members to deliver one, and at the July meeting, with a hike already priced, 3 voted for it ^[19][20]. Fund yields would follow bill yields up over the following weeks ^[18].

The reading that this money is being withheld from stocks is not testable against these numbers: the report tracks fund balances, bank time deposits and bill yields, none of which measures equity flows ^[27]. The flat small-CD line is the harder problem for a risk-aversion story, because small CDs are the money most sensitive to rates ^[15], and it has not grown while the categories that did grow include fiduciary sweeps and funds' own bank deposits ^[5][11]. In my view the growth is being booked at the plan and treasury level more than at the kitchen table. If small time deposits start rising again from $1.5 trillion while yields stay under 4%, savers are genuinely paying up for insured cash ^[15][17]. And if the next Z1 shows household balances still compounding at 12.8% after a hike lifts fund yields toward the 4.20% bill ^[3][7], the flow is running on something other than price.