Market Insight for Cash Investors

Insight on the economy and your cash portfolio

At the end of last year, we published a Quarterly Cash Update which provided a recap of the markets in 2023 and discussed the possibility that we had reached an inflection point in which interest rate cuts would begin in 2024. As we begin Q2 of 2024, we want to provide an updated look into the current state of the market and how recently released data has impacted interest rate cut predictions. Watch our latest Quarterly Cash Update where we recap changes in the market since the beginning of 2024, address credit concerns such as banking liquidity and commercial real estate and discuss portfolios strategies designed to help preserve yield from higher yielding securities.  

• Anthony Cucinotta, Head Trader, provides an overview of the Fed and the market’s updated predictions for interest rate cuts in the second half of 2024. While the Fed priced in three 25 bps cuts in their March FOMC meeting, recent data has caused the market to express doubt that all three cuts will happen this year. Since updated CPI and PPI data has been released, Anthony has seen “both the 2-year and 10-year rise exceptionally, highlighted by the 2-year rising almost 30 bps and the 10-year rising by almost the same amount.”
• Lance Pan, CFA, Director of Investment Research and Strategy, discusses the ending of the Bank Term Funding Program and addresses fears about resulting banking liquidity problems, stating that he isn’t overly concerned as “we have more reserves than in 2023” and “the Fed can always bring that facility back.”
• And Kate Ryan, Senior Portfolio Manager, believes that despite the possibility that rates may stay higher for longer, it is still important to add duration now in order to position portfolios for when yields do come down as a means to help preserve income. She discusses a laddered approach to structuring maturities with money continuously maturing  allowing readjustment as the economic outlook changes. 

At Capital Advisors Group, we have spent more than 32 years advising institutional cash investors on how to manage portfolios that are designed to help preserve principal, provide liquidity and maximize risk-adjusted return. Our latest Quarterly Cash Update is only the most recent example of the kind of depth and breadth of experience that we offer cash investors every day.