Cross-Sector

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Interest Rate Outlook: Inflation & Employment

2 min readInflation & Employment Readings on consumer inflation this week remained tame overall with wide variance around the average for certain components. CPI for September was up just 1.4% year-over-year and Core CPI was up 1.7% year-over-year. Weekly Initial Jobless Claims remain high at nearly 900,000 in the week ended October 10. Surging COVID-19 infection rates…

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Interest Rate Outlook: The Fed’s Inflation Target

2 min readFed officials are committed to the current level of rates until inflation exceeds 2% Several Fed officials spoke in late September on the timing of future interest rate hikes in relation to the inflation target of 2%. Chicago Fed President Evans reversed his earlier position that the Fed could start raising rates before inflation reaches…

Federal Reserve’s Economic Projections

Federal Reserve’s Economic Projections

2 min readFOMC Meeting The Federal Reserve left interest rates unchanged at yesterday’s meeting on monetary policy, and in the statement accompanying the meeting, the Fed commented that “Economic activity and employment have picked up in recent months but remain well below their levels at the beginning of the year.” And while “Overall financial conditions have improved…

What Do We Do with Prime Money Market Funds?

What Do We Do with Prime Money Market Funds?

1 min readWatch the webcast: Click the above webcast link for episode 2 of Credit Update. Hosted by Capital Advisors Group’s Director of Investment Research and Strategy, Lance Pan. Topics covered: Recap of what happened to prime funds in March 2020 Overview of characteristics that make prime funds poor candidates as “liquidity” vehicles Overview of government assistance…

Government Yield Curves are Flat and Low

Government Yield Curves are Flat and Low

2 min readFOMC Minutes Released The minutes from the FOMC’s July 28-29 meeting were released today. In the committee’s discussion about how to continue to support the flow of credit to consumers, they deemed “it would be appropriate over coming months for the Federal Reserve to increase its holdings of Treasury securities and agency residential mortgage-backed securities…

COVID-19 infection Rates Surge

COVID-19 infection Rates Surge

1 min readCOVID-19 infection rates have fallen dramatically in most industrialized nations, but new cases in the U.S. and in developing countries have surged to record levels in the last few weeks. Despite the serious setbacks, lawmakers in the U.S. continue to grapple with how to most appropriately implement mask requirements to slow the spread of the…

Why Are Prime Money Market Funds Still So Problematic?

3 min readHere we go again. As if Covid-19 hadn’t given us all enough to worry about, in March it precipitated a short-lived run on prime money market funds. By the end of the month, approximately $100 billion had drained from institutional prime money market funds—more than 30% of their total assets. For a minute, the 2008…

Liquidity in Question – What Do We Do with Prime Money Market Funds?

Liquidity in Question – What Do We Do with Prime Money Market Funds?

17 min readDOWNLOAD FULL REPORT Abstract After sudden shareholder redemptions in March stressed money market funds, it became clear that several rounds of reforms since the 2008 crisis have failed to bolster institutional prime money market funds as liquidity vehicles. While extraordinary government measures once again helped to stabilize the market, they should not be recurrent policy…

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June Unemployment Report Shows Beginning of Recovery

2 min readStates across the U.S. set multiple single day records for new COVID-19 cases this past week. On June 27th, Florida reported 9,500 new cases, breaking its own record for daily new cases, which it set just a day earlier. Driven primarily by Southern and Southwestern states, the surge has forced legislatures to act. Florida has…

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Interest Rate Outlook: Controversial May Employment Report

2 min readFOMC Meeting The Federal Reserve’s Open Market Committee met last week and Chair Jerome Powell spelled out a bleak outlook for the U.S. economy. The Fed’s year-end median expectation for the unemployment rate is 9.3%, with 2020 GDP growth projected at negative 6.50% and core PCE inflation at 1.0%. At the press conference following the…