J.P. Morgan Securities' latest "Short-Term Fixed Income" weekly features a section titled, "Corporates maintain large liquidity portfolios, and even larger cash balances." It states, "As expected, corporations continue to maintain large liquidity portfolios. Based on balance sheet data for S&P 500 non-financial companies, we estimate liquidity portfolio balances as of 4Q25 registered $2.6tn, an increase of $119bn QoQ and $257bn YoY. At these levels, they surpass even the prior peak of $2.5tn in the months after Covid in 2020." (Note: Please join us next week for our Bond Fund Symposium, March 19-20 in Boston. We're still taking registrations!)
The brief continues, "Notably, cash and cash equivalents rose materially, even as investment securities drove most of the increase in liquidity portfolios. We estimate aggregate cash and cash equivalents rose by nearly $117bn last year, reaching $1.38tn by 4Q25.... This marks one of the larger annual increases in cash and cash equivalents, though still behind what we saw in 2020 and 2023. Still, as far as cash levels go, at these levels, this will be the highest amount of cash and cash equivalents corporations have held in at least a decade."
It says, "Not surprisingly, the increase was not broad-based and concentrated in sectors that generally hold more liquidity. A handful of sectors drove most of last year's growth in cash positions: Information Technology added about $47bn, Communication Services $36bn, Health Care $20bn, and Consumer Discretionary $8bn. Outside these sectors, cash balances across other non-financial corporates remained largely flat."
JPM explains, "The timing of the rise in cash and cash equivalents is just as notable as the magnitude.... The growth in cash positions last year was concentrated in 3Q and 4Q ... most of the increase in cash and cash equivalents in 2025 occurred in the second half of last year. While it is typical for companies to carry higher cash balances later in the year due to seasonality, the growth in 2H25 was meaningfully larger than in prior years. Among the hyperscalers, the buildup in cash coincided with a sharp rise in long-term debt issuance. Based on 10-Qs, these companies increased their long-term debt by nearly $100bn in 2H25, while their cash holdings rose by almost $80bn over the same period."
They tell us, "This dynamic mattered for the front end. Taxable MMFs posted standout growth in 2025, with AUMs rising roughly $920bn to nearly $8tn. It's possible that some portion of this growth was attributable to hyperscalers and other large corporates debt proceeds being placed in MMFs."
The piece adds, "To that end, MMF AUMs have already increased by more than $150bn year-to-date, lifting total AUMs to roughly $8.1tn and tracking modestly ahead of the pace observed over 2023–2025.... To the extent that corporations continue to raise debt with proceeds that are not immediately deployed, it is possible that a portion of those funds could be temporarily placed in a taxable MMF. Together with the reinvestment of interest income and still attractive MMF yields, the backdrop remains supportive of further increases in MMF balances through the year."
J.P. Morgan Asset Management recently published an insight titled, "Policy divergence reshapes the front end: Implications for Global Liquidity in 2026." It tells us, "Following a broadly synchronised monetary policy easing phase over the past few years as inflation retreated, central banks are beginning to chart different courses based on local rather than global macroeconomic conditions. We believe this divergence is likely to shape short-term rate behaviour through 2026, though geopolitical risks and economic data surprises could still push central bank off course."
JPM continues, "Monetary policy in several major economies retains an easing bias, while fiscal policy remains supportive. In our view, this combination continues to underpin liquidity conditions. At the same time, the risk landscape is evolving. Geopolitical tensions, lingering trade worries, fiscal sustainability concerns and elevated corporate debt issuance may contribute to episodic volatility."
They write, "We believe central bank divergence has replaced synchronised easing as the defining front-end theme for 2026. This shift is likely to result in more volatile short-term rate outcomes and sharper responses to local data and policy signals. While the overall policy bias in several major economies remains toward easing, geopolitical and fiscal risks warrant continued vigilance."
The piece adds, "In this environment, we recommend a focus on liquidity and diversification -- maintaining high-quality exposures, managing duration actively and stress-testing portfolios for policy and geopolitical uncertainty remain central to prudent liquidity management. Cash segmenting is also advisable: Operating balances may remain in money market strategies prioritising liquidity and capital preservation. More stable balances may consider selective extension into ultra-short strategies, subject to risk tolerance and liquidity needs."
