9 min readAbstract Deposit rates are starting to increase as we move further into a rising rate environment. Banks still have not rewarded depositors sufficiently with a 21% average deposit beta, although some executives expressed moving it above 50%. The wait for higher rates continues unless depositors are willing to consider market-based instruments. There, several options exist…
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…
1 min readBanks have traditionally been a little slow to follow interest rate hikes by the Fed with comparable rate increases on their own deposit accounts. But this time around they seem to be moving more slowly than ever. Our August research report―Higher Deposit Rates-Where Art Thou?―looks back at the past two Fed tightening cycles and compares…
3 min readAbstract The return of yield opportunities presents institutional cash investors with fresh challenges. Higher rates have driven up the cost of staying with ultra conservative instruments. Money market fund reforms have left corporate cash managers with few clear choices to add yield. And historically popular cash vehicles that have undergone significant changes demand a fresh…
4 min readAbstract Key takeaways: While details are lacking, one can generally expect balance sheet normalization to start at the end of 2017, with reinvestment gradually phased out over one year, taking 2.5 years to complete for a total reduction of $1.8 trillion in Treasury and MBS bonds. Impacts to Expect: Higher interest rates on Treasury securities…
3 min readThe Earnings Credit Rate (ECR) has been a successful tool used by banks to lure corporate depositors during the low interest rate environment, but shouldn’t be expected to keep pace with rising interest rates. Banks offer ECRs to offset bank transactional fees for non-interest bearing deposits accounts, effectively acting as a conduit to hard interest….
3 min readAbstract Treasury organizations maintain deposit relationships despite uninsured credit risk and lost yield opportunity. Earnings credit rates may become less competitive than market-based rates. Including separate accounts in the mix helps address both credit and yield objectives in institutional liquidity management. Introduction The search for liquidity management solutions reached a new level of significance when…
5 min readPerhaps no word better describes the start of 2017 than “transition.” The year began with the White House’s transition from the Obama to the Trump administration, continued with the rise of European populism, and recently culminated in the official beginning of Britain’s transition out of the European Union. Somewhat less noticeably, change is also taking…
3 min readAs stocks soar to record highs, it seems as though the decline in long bond yields has been endless. Less than a year after the Federal Reserve saw economic conditions sufficient to warrant the first rate hike in almost a decade, rates on long-term U.S. Treasury bonds now lie at near-record low levels (with the…
3 min readWhen the Fed raised interest rates last December for the first time since 2008, many corporate cash investors who had lived through previous tightening cycles expected a series of increases through 2016. But worldwide turbulence in equity markets in the first quarter, additional easing by central banks overseas, and ongoing uncertainty about the U.S. economy…