MacroSnaps25 July 2026
No. 20Americans have so much spare cash parked in money funds that it earns them about $750 million a day, for doing nothing.
Money funds pay about 3.5%. A bank savings account pays under half a percent. That gap is why $7.9 trillion has piled up here.
Cash in money funds$7.9tn(2026)Short-term rate3.6%(2026)Bank savings rate0.4%(2026)
Left: cash in US money market funds ($tn), now a record $7.9tn. Right: the short-term rate money funds roughly pay, versus the average bank savings rate, which never leaves the floor. Money funds pay about 3.5% today; a bank savings account pays under half a percent.
Why this is happening
- A money fund pays close to the Fed's short-term rate, about 3.5% now, for almost no risk. A bank savings account pays under half a percent, so a money fund is simply the better place to leave cash.
- Every bout of uncertainty, from bank wobbles to elections to wars, sends more money to the safest corner that still pays.
- Once cash lands there and keeps earning, people are slow to move it back out.
The take
This is the dry powder everyone watches. Rates have already fallen from over 5% to about 3.5%; if that yield keeps dropping, some of this $7.9 trillion goes looking for a better home, and that is a lot of fuel for whatever it picks.