There is plenty of cash available to be invested in the markets and financial institutions. It is simply too frightened to come out and play.
According to Reuters “A steady move into cash is also seen in Merrill Lynch’s monthly poll of fund managers. Some 51 percent were overweight in cash in March, compared with 48 percent in February and 43 percent in January.”
One by-product of that is money flowing into 10-year Treasuries should push rates down there, making them less attractive. But, there is so much fear about the future of large financial companies and equities that the capital is unlikely to move from government paper back into the markets.
It could, however, go into commodities like oil and grains. That way it can drive prices up further, fuel inflation, and make the ultimate value of the cash reserves fall.
Douglas A. McIntyre