Money is pouring into money market funds as investors seek safety: $286bn in March, the FT reports. While that is not a massive shift relative to the size of the US banking system (it is less than 2 per cent of the $17.5tn of bank deposits) it shows that nerves remain on edge. The two-year yield is the bond market’s most sensitive barometer of Federal Reserve rate policy, and since last Wednesday — the day of the Fed’s press conference — it has fallen by almost half a percentage point, to 3.77 per cent. That’s a lot, and it’s especially a lot given that what the Fed announced on Wednesday was a 25 basis point rate increase, and that the Open Market Committee’s “dot plot,” showing each member’s future policy expectations, shows there is at least one more hike to come this year. Read More...
Money is pouring into money market funds as investors seek safety: $286bn in March, the FT reports. While that is not a massive shift relative to the size of the US banking system (it is less than 2 per cent of the $17.5tn of bank deposits) it shows that nerves remain on edge. The two-year yield is the bond market’s most sensitive barometer of Federal Reserve rate policy, and since last Wednesday — the day of the Fed’s press conference — it has fallen by almost half a percentage point, to 3.77 per cent. That’s a lot, and it’s especially a lot given that what the Fed announced on Wednesday was a 25 basis point rate increase, and that the Open Market Committee’s “dot plot,” showing each member’s future policy expectations, shows there is at least one more hike to come this year.
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