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’s Good Is Good
Five months into the year, preferred investment strategies for public funds investors are performing quite well, thank you. Our updated Dashboard, with all of these details and a summary of the Security and Exchange Commission’s Money Fund Statistics is here. The cash strategy concentrates investments in LGIPs or money funds. Maximum flexibility and liquidity are […]
Is Crypto in Our Future?
Crypto is slowly making its way into the consciousness of mainstream investors, including those who invest public funds. One indication is the passage last week by the House of Representatives of FIT21 (the Financial Innovation and Technology for the 21st Century Act), though it is unlikely to become law in this Congress. Another is a (reluctant?) […]
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 […]
A Big Week for the Bond Market
It is a big week for the bond market with a slew of economic releases (jobs, consumer confidence and a few inflation measures), the Federal Open Market Committee meeting (Tuesday/Wednesday) and investors desperately seeking direction. Public sector investors have a constrained universe: they do not generally invest in equities (though a few do), and their […]
The Little Engine that Couldn’t: The Demise of BSBY
The details. After the Great Recession regulators determined to replace LIBOR as the dominant index to link floating rate securities. LIBOR was meant to represent the rate on unsecured obligations (commercial paper, corporate notes, bank loans, etc.) It had grown over its 40-year life to be the dominant market index, and as such had great […]
Banking Crisis + 1 Year: Should Federal Deposit Insurance Reform Be Part of the Response?
A year ago, after the wreckage of the bank failures led by Silicon Valley Bank had been cleared, reforming deposit insurance was offered as a way to reduce the risk of future bank runs More recently, the effort has been sidelined by the battle over proposed rules to raise bank capital requirements and liquidity. Down […]
First Quarter Investment Returns: Cash Led the Way Again
• Local government investment pools and money funds once again produced market-leading returns in the 2024 first quarter. The beat by cash-type investments followed the strong showing for cash-type investments in 2023. • Returns of longer-duration portfolios were dragged down by a modest rise in interest rates. • The yield curve also worked against longer-duration […]
Public Sector Investment Assets Grew Strongly Last Year, Providing a Budget Cushion for States and Localities
The details. Investment assets grew by 7.5% last year, propelled by strong state and local tax collections, budget surpluses and investment earnings at rates that finished the year at their highest levels in a generation. The growth came after two years, 2020 and 2021, where Covid relief funds swelled state and local budgets. In that […]
Illinois LGIP Could Open a Pool for Non-Profits
Illinois by Nick Youngson CC BY-SA 3.0 Pix4free The Illinois Treasurer is seeking authority to create a local government investment pool for non-profit organizations. Senate Bill 3157 (and an identical bill in the House) would authorize a Non-Profit Investment Pool to operate in a manner similar to the Illinois Public Treasurer’s Pool (Illinois Funds), the […]