4 min readRegardless of what you might think about cryptocurrencies, blockchain technology represents an undeniable breakthrough in how we manage information. In the last couple of years, interest in the sector has increased materially, with investments by the top 50 VC firms in the field exceeding $600 million in the first half of 2018 alone. It won’t…
2 min readIf you’re a cash investor waiting for bank deposit yields to catch up with the Fed’s interest rate hikes, don’t hold your breath. The so-called “deposit beta,” which measures how fast banks raise their rates as a percentage of the increase in the federal funds rate, has risen at a snail’s pace compared to previous…
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…
2 min readInstitutional cash investors haven’t had much time to worry about offshore money market funds over the past several years as they’ve been too busy grappling with all the recent changes to US-based institutional funds. But new developments are making offshore funds more difficult to ignore, especially those involving the implementation of MMF reforms in Europe…
3 min readAbstract Offshore institutional money market funds (MMFs) have largely sat in the periphery for US-centric liquidity investors, but European reform and repatriation of overseas profits may result in transformational changes. Offshore fund investors will have few alternatives other than low volatility net asset value (LVNAV) funds. Public debt funds may not accommodate large inflows. A…
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…
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…
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,…
4 min readAbstract At the start of each year, we typically name three broad market trends or events that could potentially have the greatest impact on the short-term debt market. For 2018, we think central bank tightening, tax reform and event risk will have the most impact on short-term debt markets. We are generally sanguine about the…
4 min readExecutive Summary ABCP can still be a good investment choice in large corporate treasury accounts due to the liquidity, flexibility, and yield potential of the asset class. Most traditional multi-seller conduits persevered through the recent financial crisis. Despite low issuance and investor skepticism, the mechanism of ABCP structures improved due to new regulatory measures. Potential…