The Fed, the Bank of England (BoE) and the European Central Bank (ECB) all cut rates in Q3, as US money market fund assets hit a record high in September.
Like much of the world, we will be closely watching the outcome of the US presidential election as well as geopolitical tensions in the Middle East for their potential market fund flows and the impact of the Fed’s forward guidance on monetary policy.
The market digested the Fed’s first rate cut since 2020 without extreme price volatility, but we expect some marginal interest rate volatility going forward. We continue to closely monitor money market
Global Liquidity Snapshot offers a quarterly at-a-glance look at what’s happening in short-term liquidity markets around the world.
The Federal Open Market Committee (FOMC) reduced the short-term policy rate by half a percentage point, resulting in the current federal funds rate range of 4.75%-5.00%. This downward shift in monetary policy was the first since 2020. The 50-basis point (bp) move was at the higher end of market expectations. There was only one dissenter among the Fed’s voters, signifying its collective desire to move out of restrictive policy and to eventually normalize rates in line with its 2% average inflation target. The median dot plot for 2024 implied two more 25 bp cuts this year and 100 bps of cuts in 2025.
On September 25, money market fund industry assets hit a record high of USD6.4 trillion. Elevated short-term yields, coupled with the inverted US Treasury yield curve, have been a driving factor of growth in money market fund assets, as money market funds remain an attractive cash management investment vehicle for investors.
With the Federal Reserve lowering interest rates, here is what that means for liquidity investors and how to manage liquidity in a declining interest rate environment.
In this discussion we review the factors that influenced the sharp moves in the repo market in 2019, and explore the possibility of a reoccurrence.
How are treasurers managing short-term investments while preparing for the future? Find out in the 2024 AFP Liquidity Survey, sponsored by Invesco Global Liquidity.
NA3922920
This link takes you to a site not affiliated with Invesco. The site is for informational purposes only. Invesco does not guarantee nor take any responsibility for any of the content.
