2 min readRisk-averse institutional cash investors know that rising interest rates can be a mixed blessing. Higher returns are expected, but lower asset prices can result in unacceptable losses, both realized and unrealized, in cash portfolios. Our research report this month, Optimizing Separate Account WAM in a Rising Rate Environment, is for cash managers striving to maintain…
2 min readWhen Jerome Powell emerged as the front-runner to succeed Janet Yellen as Federal Reserve Chair, he was quickly pegged as a moderate “continuity candidate.” A low-profile, but hard-working, member of the Federal Open Market Committee since 2011, he had supported Yellin’s course of slow-but-steady interest-rate increases as the economy gradually recovered from the great recession….
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,…
2 min readSometimes the best leverage in a negotiation comes from your ability to walk away from the table if necessary. Life sciences companies, however, often find themselves in exactly the opposite position. With long, uncertain development cycles and expensive, time-consuming regulatory approval processes, they burn through huge amounts of capital at a breakneck pace. Too often,…
2 min readIn the run-up to the 2008 financial crisis, asset-backed commercial paper (ABCP) programs were among the many investments tainted by the subprime mortgage meltdown. The crash precipitated a steady outflow from a total of $1.2 trillion in ABCP investments at their peak in late 2007 to $238 billion in October 2017. But in recent years,…
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 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…
1 min readWho would have ever thought the debt ceiling limit would become a dinner-table topic? In the past, Congress routinely voted to approve higher limits on debt covering the spending it had already authorized, and hardly anyone noticed. But in 2011, the debt-ceiling vote became a political football, with authorization tied to contentious debates about limits…
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…
1 min readRising interest rates may offer new opportunities for higher yields, but they also present institutional cash investors with fresh challenges. Ultra-conservative investment strategies no longer meet expectations for higher returns, so managers know they may need to move beyond a safe mix of Treasuries and FDIC-insured cash accounts. In an earlier era, their job would…