9 min readCash may be King, but it is also going virtual before our eyes. Digital cash used to be the domain of tech innovators and cryptocurrency enthusiasts. But if a pair of tokenized money market mutual funds (MMFs) is any indication, instantaneous movement of cash untethered to market hours may be close to reality. If today’s…
4 min readRecent market turmoil, triggered by the Bank of Japan’s interest rate hike and disappointing US jobs data, has resulted in a sell-off in Japanese megabanks’ stocks. Cash and short-duration bond investors may be wondering if they should worry about these banks’ credit profiles. Here is a balanced analysis to help them make an informed decision….
11 min readIntroduction: Higher Rates are Coming to An End Recent comments by Federal Reserve officials indicate that monetary policymakers may soon start lowering short-term rates as inflation and employment data continue to moderate. This shift comes after a period of keeping interest rates more elevated than initially thought. Meanwhile, stockpiles of cash from Covid-era policies continue…
10 min readAbstract Changing credit landscapes, more complex financial products, multiple touchpoints with large financial intermediaries, and high profile bank failures are just some of the challenges treasury management professionals and cash managers face in counterparty risk management. An effective counterparty strategy should provide clarity on the counterparties’ credit strength individually and collectively, and have a desired…
15 min readAbstract BBB-rated debt continues to offer new possibilities for cash investors. Although it involves taking on incremental credit risk, allowing purchase of these securities can help alleviate supply shortages while also offering additional return opportunities. Should investors look into adding BBB names to their portfolios, we recommend that they follow these principles. Guiding Principles: Introduction…
12 min readAbstract In a falling interest rate environment, sensitivity related to uninsured deposits and income preservation argues for consideration of cash management vehicles outside of bank deposits and money market funds. While ultra short bond funds (USBFs) hold promise as potential yield enhancing tools, they may exhibit many of the same issues as prime funds, with…
14 min readMinutes from the December FOMC meeting indicated that some Federal Reserve officials wanted to begin discussing “slowing the pace” of securities runoffs on its balance sheet. Federal Reserve Chairman Jerome Powell confirmed after the January meeting that the Committee will begin formal conversations on the topic at its March meeting. The indication of an end…
19 min readDOWNLOAD FULL REPORT Introduction By Lance Pan, CFA “It was the best of times, it was the worst of times.” As the new year approaches and I prepare this introduction to our annual market outlook on cash investments, I can’t think of a better way to describe the past year than this quote by Charles…
13 min readAs the SEC’s MMF rule amendments come into effect in October 2023, investors looking to return to institutional prime funds may want to be aware of the pros and cons of these changes. DOWNLOAD REPORT Introduction Three years after a Covid-induced market panic that caused runs on prime money market funds (“MMFs”), the Securities and…
12 min readIntroduction Fitch Ratings’ downgrade of the United States coveted “AAA” credit rating to “AA+” on Tuesday, August 1st, 2023, drew an end to a minor mystery. The rating agency left U.S. sovereign debt on “Rating Watch Negative” after Congress agreed to suspend the debt limit just days before the x-date in June, citing “lower confidence…