Portfolio Manager Commentary

  • The debt ceiling—frequently asked questions Any discussion should be prefaced by our belief that the likelihood of one or multiple technical defaults due to a protracted debt-ceiling debate is remote; that in the unlikely event there should be a technical default, it will be short-lived; and that upon resolution, investors and funds are likely to be unaffected. We further believe that, given evidence of preplanning, the Federal Reserve (Fed) would be prepared to step into the markets in order to calm them and ensure smooth and orderly functioning of the government markets.
  • Overview, strategy, and outlook: As of January 31, 2019 The January news cycle was dominated by the federal government shutdown. As the shutdown dragged on, the talking heads nattered about the amount of gross domestic product growth being destroyed each week, the economic hardships affecting furloughed workers and their families, knock-on effects throughout the world, and the negative volleys between the executive and legislative branches of government stalling progress on resolving their impasse.
  • Prime MMFs are catching investors’ interest again A notable change has occurred within the MMF space. Prime MMFs have been attracting assets. This is a reversal of the exodus of money that these funds experienced leading up to the implementation of SEC Rule 2a-7 changes in October 2016.
  • Overview, strategy, and outlook: As of December 31, 2018 It would not be surprising if many investors heaved a sigh of relief to see 2018 in the books. And though the money markets were an oasis of calm for some, we were not without a number of topics meriting discussion throughout the year.
  • Overview, strategy, and outlook: As of November 30, 2018 On November 28, the Board of Governors of the Federal Reserve (Fed) released its Financial Stability Report, a 46-page document examining the Fed’s framework for monitoring and promoting financial stability, and its current assessment of the U.S. financial system’s resilience under potential stress.
  • Overview, strategy, and outlook: As of October 31, 2018 As was widely expected by market participants, the Federal Open Market Committee (FOMC) raised the target range for the federal funds rate by 25 basis points (bps; 100 bps equal 1.00%) to 2.00%–2.25% at the conclusion of its September 26 meeting. The accompanying statement took note of ongoing strengthening in the labor market and economic activity rising at an accelerated rate.
  • Overview, strategy, and outlook: As of September 30, 2018 “Surveying [what’s left of] the landscape”. That’s how we titled the overview section of our September monthly commentary published 10 years ago. September 2008 was a seminal moment in the money markets.
  • Overview, strategy, and outlook: As of August 31, 2018 The month of August is notoriously slow in this business. A number of firms in our industry still require that employees take two consecutive weeks off at some point during the year, and while many of those vacations occur throughout the summer, they seem to be especially back-loaded into the month of August.
  • Overview, strategy, and outlook: As of June 30, 2018 As expected, the Federal Open Market Committee (FOMC) raised its target rate 25 basis points (bps; 100 bps equals 1.00%) to a range of 1.75% to 2.00% after the June 13 meeting. The corresponding statement reflected the view that the economy continues to expand and inflation would remain symmetrical around its 2% threshold over the medium term. Risks to the economic outlook appear roughly balanced.
  • Overview, strategy, and outlook: As of May 31, 2018 The Federal Reserve (Fed) releases its meeting minutes on the Wednesday three weeks after the meeting’s conclusion. It’s usually a sleepy affair, with bond market strategists reading tea leaves by weighing the input of a few committee members against opinions held by several, which are usually eclipsed by those agreed upon by many.
  • Overview, strategy, and outlook: As of April 30, 2018 The end of April seems to serve as an inflexion point of sorts for the money markets. Experience has shown that it represents a turning point at which seasonal outflows from money market funds stop, or at least stabilize, followed by a gradual buildup in assets in the second half of the year, accelerating into year-end.
  • Overview, strategy, and outlook: As of March 31, 2018 While the peaceful transition of power at the Federal Reserve (Fed) occurred on February 1, late February and early March gave the markets the first taste of policy under new Fed Chair Jerome Powell.
  • Overview, strategy, and outlook: As of February 28, 2018 The Structured Finance Industry Group held its 2018 conference in Las Vegas from February 25–28. While modest relative to other industry conventions, with well over 7,000 attendees the event remains the largest structured finance conference in the world, drawing professionals from rating agencies, issuers, dealers, the investing and legal communities, and other participants in the structured finance marketplace.
  • Overview, strategy, and outlook: As of January 31, 2018 Like the horror-film villain that just won’t die, the debt ceiling continues to be an issue in the money markets. Its current incarnation comes with an odd mix of unusual uncertainty regarding cash-flow timing and, conversely, perhaps more clarity politically.
  • Tax Reform—Overseas Cash and Repatriation Implications Prior to 2018, the United States’ relatively high corporate tax rate incented many domestic companies with international operations to locate foreign subsidiaries in tax-haven countries and delay U.S. tax payments.
  • Overview, strategy, and outlook: As of December 31, 2017 In the money markets, two themes seem to persist and never go away, and last year proved no different from previous years. We were able to break out of that cycle with only 2 of our 10 commentaries this year by producing focus pieces unrelated to those issues.
  • Overview, strategy, and outlook: As of November 30, 2017 When we last met, the House was teetering on the brink of approving a tax reform package, which it passed shortly after the month began.
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