Although the Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) typically rise under most presidents, their annualized returns with President Donald Trump in the White House have been well above average. The rise of artificial intelligence (AI), coupled with Trump’s favorable corporate income tax policies, has fueled growth on Wall Street.
But the Trump bull market appears to be running on borrowed time. While a laundry list of headwinds exists on Wall Street, including historically pricey valuations and record margin debt, it’s a quarterly reported economic data point that strongly suggests a course correction is coming.
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Investors are piling into money market funds at a historic pace
In mid-June, the Board of Governors of the Federal Reserve released the quarterly update on total financial assets held in money market funds. A money market fund is a type of mutual fund that invests in extremely safe assets, such as short-term U.S. Treasury bills and certificates of deposit (CDs).
Investors park their money in money market funds for two purposes: income and stability. There’s virtually no risk to principal in U.S. Treasuries and CDs, and yields are often highly predictable.
Although we’d expect the amount of capital invested in money market funds to grow over multiple decades, it’s more advantageous to own fixed-income assets when interest rates rise. For example, when the Fed raised interest rates by more than five percentage points between March 2022 and July 2023, it was only natural to see investors pile into money market funds.
However, the latest money market fund data follows a worrisome trend.
During the first quarter of 2026, total financial assets held in money market funds ballooned to an all-time high of $8.29 trillion. Even though we’d have expected capital to flow out of money market funds when the Federal Open Market Committee (FOMC) began cutting interest rates in September 2024, inflows never slowed. Despite yields on fixed-income assets declining, investors have continued to pile in — and that’s a big-time worry.
Investors are clearly skeptical about the Trump bull market
Since the second quarter of 2022, total assets in money market funds have surged 65%. This suggests that investors aren’t convinced the AI-powered Trump bull market has staying power and want to protect their principal.
