3 min readAbstract Offshore institutional money market funds (MMFs) have largely sat in the periphery for US-centric liquidity investors, but European reform and repatriation of overseas profits may result in transformational changes. Offshore fund investors will have few alternatives other than low volatility net asset value (LVNAV) funds. Public debt funds may not accommodate large inflows. A…
2 min readIn the midst of the recent saber rattling over a potential trade war between the U.S. and China, one salient point has often been overlooked: so far, other than narrowly focused tariffs on steel and aluminum, neither side has taken immediate concrete steps to act on the announcements. The recent tit-for-tat threats from the Trump…
4 min readAbstract Trade tensions between the U.S. and China have been making headlines recently. The Trump administration recently rolled out plans to place 25% tariffs on $50 billion of Chinese imports, to which China responded in kind. In the near-term, tensions may continue to escalate, but ultimately a negotiated settlement is in the best interests of…
4 min readAbstract For institutional cash investors unsure of separately managed accounts in a rising interest rate environment, our scenario analysis suggests that a laddered portfolio of agency and corporate securities with a modest WAM could outperform the government money market fund proxy with negligible unrealized loss concerns. Both agency and corporate portfolios with maximum maturities of…
2 min readThe great paradox of 2017 was the relative calm in short-term debt markets in the face of unprecedented turbulence in the daily news cycle. Our new President’s unconventional communication style did not lead to the financial market volatility many had predicted. And despite ongoing partisan political turmoil, multiple terror incidents, an uncertain start to Brexit,…
4 min readAbstract At the start of each year, we typically name three broad market trends or events that could potentially have the greatest impact on the short-term debt market. For 2018, we think central bank tightening, tax reform and event risk will have the most impact on short-term debt markets. We are generally sanguine about the…
2 min readIt’s been a year since new SEC rules restructured institutional prime money market funds by requiring that they float net asset values (NAVs) and impose redemption restrictions in times of fiscal stress. When the changes hit, a generation of cash managers who had always turned to prime funds as a matter of course suddenly were…
2 min readAbstract In the year since the SEC instituted new rules governing money market mutual funds, institutional prime funds have recaptured some lost ground, although balances still lag government funds. Fund characteristics returned to pre-reform levels with wide dispersions and concentrated exposures to non-US financial issuers. Asset-backed instruments also increased. While prime fund yields benefitted from…
2 min readWhen Republican leaders unveiled their long-awaited tax-reform proposal late last month, politicians and pundits jumped on the nine-page document to determine potential winners and losers. The “long-on-promises, short-on-details” nature of the so-called “Trump tax plan” raised more questions than it answered, rendering many predictions little more than conjectures and educated guesses. Even so, there were…
5 min readAbstract The Republican bill represents a starting point for tax and budget negotiations. While details are lacking, the current plan offers some interesting angles for market participants to think about their liquidity investment strategies. We highlighted parts of the bill relevant to corporate cash investors and their potential impact on issuers and investors in the…