Research Note: Commercial Paper Market Should be More Resilient After Money Fund Reforms
Commercial paper is a core holding of many state and local government investment portfolios. It provides a yield boost to separately managed portfolios and prime-based local government investment pools. The commercial paper market is a bit finicky: If you are a buyer there is little flex: you generally receive the rate posted by issuers. If […]
What Treasury’s Borrowing Plans Mean for State and Local Government Investors
A shortage of short-term Treasuries? Perhaps not, but after a rapid expansion of issuance that dominated the market in the past two years, three developments could make it feel like there aren’t enough short-term Treasuries to go around. Why it matters. State and local governments rely on Treasuries as the foundation for their portfolios, with […]
Fair Weather: Public Funds Investors Are Well-Positioned to Meet Investment Expectations
The accompanying chart of recent moves in yields speaks volumes about the current market environment and its implications for public funds investors. Since the year began short-term money market rates have been at or near their generation highs. And they have barely noticed the big moves in market sentiment. LGIP rates, as measured by the […]
Prime Money Funds: How Changes Could Affect Public Funds Investors
Plans by a little-known money market fund to alter its investment strategy could be a harbinger of changes to the industry that have significant implications for public funds investors. The implications are three-fold: 1) state and local governments invest in money funds directly and some local government investment pools (LGIPs) invest in them as well, […]
Recent Moves by LGIP and Money Fund Managers Support View that Fed is Nearly Done Tightening
Money market fund and local government investment pool managers have been re- positioning portfolios on the assumption that the Federal Reserve is near the end of its tightening cycle. The moves have taken place incrementally over the past several months as the “nearly done” mantra suffused the market.
Seems Like Banks Just Can’t Stay Out of the Headlines
Last week Moody’s took ratings action on 27 US banks. This week (so far) the chairman of the Federal Deposit Insurance Corporation announced that his agency would issue regulations requiring that large regional banks (assets greater than $100 billion) adopt “living wills” to facilitate resolution in the event they become insolvent. And FitchRatings warned that it could downgrade dozens of US banks.
Beyond the News Issue #4
This week: The SEC adopted new rules to strengthen the resilience of money market funds, but they may also further hamper the operation of institutional prime funds. Local government investment pools are not subject to these rules. but in a Spotlight piece to be released next week we’ll analyze some of the important implications for LGIPs. We also note an update from Fitch Ratings on its negative outlook for the AAA rating for the United States.
See you next week!
Beyond the News: Issue #1
Beyond the News this week covers bank regulations, the status of the SEC’s Money Market Reform proposal and a quick comment on Crypto.