Latest news with #DeborahCunningham
Mint
8 hours ago
- Business
- Mint
Investors Rush to Pour Cash Into $7.4 Trillion US Money-Market Fund Industry
The rush of cash into the US money-market funds is showing few signs of slowing as it secured a record $7.4 trillion in assets. Investors have poured more than $320 billion into the funds so far this year, according to Crane Data LLC, making it one of the biggest benefactors of the Federal Reserve's current monetary policy. That's something of a surprise for those on Wall Street who'd gone into 2025 assuming officials would lower interest rates and sap the attractive returns offered by the industry. '$7 trillion can easily be $7.5 trillion in 2025,' said Deborah Cunningham, chief investment officer for global liquidity markets at Federated Hermes. 'Five-percent-plus rates were nirvana, four-percent-plus is still very good — and if we dip down into the high threes, that's quite acceptable as well.' The average simple seven-day yield is now 3.95% for government funds and 4.03% for prime, an 8 basis point spread, according to Bank of America Corp. It's a compelling backdrop as some 600 participants gather at the annual Crane's Money Fund Symposium, which kicks off Monday in Boston. Money funds have seen their coffers swell in recent years, notably in early 2020 for their haven appeal and again as the Fed's rate-hiking cycle boosted yields. Even as the Fed pivoted to cutting rates last year, assets continued to rise, with these funds typically slower to pass along the effects of lower rates when compared to banks. Households have been a key driver of the inflows. Since the Fed started raising rates in March 2022, total assets under management in US money funds have swelled by roughly $2.5 trillion, and retail investors have accounted for about 60% of that, Investment Company Institute data show. Data from ICI exclude firms' own internal money funds, unlike Crane Data, which tracks the money market industry. Inflows have continued even as the industry sees some investors embrace alternatives, such as ultra-short funds in the fixed income or equities, Cunningham said. Overall, though, it's a far cry from the exodus of cash from money-market funds that some on Wall Street had forecast. 'It's not surprising asset levels have held on and grown,' said Michael Bird, senior fund manager at Allspring Global Investments. 'Even if the Fed picks up its easing campaign this year, rates will still be relatively high.' The Fed last week laid out forecasts for two quarter-point rate cuts this year, aligning with market pricing. Although the risk that conflict in the Middle East drives up oil prices and causes a resurgence in inflation remains an uncertatinty, traders see a quarter-point reduction as likely in September and all but guaranteed by October. Given that interest-rate backdrop, money-market funds are trying to extend the weighted-average maturity — known as WAM — of their holdings as long as possible to capture elevated yields. Fund managers have also adjusted holdings to compensate for the effects of debt-ceiling drama. While Wall Street strategists largely expect the government to raise the debt limit as part of the reconciliation process by late of July or early August, some funds have put more cash toward repurchase agreements — loans collateralized by Treasuries or agency debt — as an alternative. Still, 'the expectation is when the debt ceiling gets resolved, there will be a significant increase in bill issuance, which helps yields,' Bird said. 'Uncertainty is helping our product.'
Yahoo
9 hours ago
- Business
- Yahoo
Investors Rush to Pour Cash Into $7.4 Trillion US Money-Market Fund Industry
(Bloomberg) -- The rush of cash into the US money-market funds is showing few signs of slowing as it secured a record $7.4 trillion in assets. Bezos Wedding Draws Protests, Soul-Searching Over Tourism in Venice One Architect's Quest to Save Mumbai's Heritage From Disappearing NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports Investors have poured more than $320 billion into the funds so far this year, according to Crane Data LLC, making it one of the biggest benefactors of the Federal Reserve's current monetary policy. That's something of a surprise for those on Wall Street who'd gone into 2025 assuming officials would lower interest rates and sap the attractive returns offered by the industry. '$7 trillion can easily be $7.5 trillion in 2025,' said Deborah Cunningham, chief investment officer for global liquidity markets at Federated Hermes. 'Five-percent-plus rates were nirvana, four-percent-plus is still very good — and if we dip down into the high threes, that's quite acceptable as well.' The average simple seven-day yield is now 3.95% for government funds and 4.03% for prime, an 8 basis point spread, according to Bank of America Corp. It's a compelling backdrop as some 600 participants gather at the annual Crane's Money Fund Symposium, which kicks off Monday in Boston. Money funds have seen their coffers swell in recent years, notably in early 2020 for their haven appeal and again as the Fed's rate-hiking cycle boosted yields. Even as the Fed pivoted to cutting rates last year, assets continued to rise, with these funds typically slower to pass along the effects of lower rates when compared to banks. Households have been a key driver of the inflows. Since the Fed started raising rates in March 2022, total assets under management in US money funds have swelled by roughly $2.5 trillion, and retail investors have accounted for about 60% of that, Investment Company Institute data show. Data from ICI exclude firms' own internal money funds, unlike Crane Data, which tracks the money market industry. Inflows have continued even as the industry sees some investors embrace alternatives, such as ultra-short funds in the fixed income or equities, Cunningham said. Overall, though, it's a far cry from the exodus of cash from money-market funds that some on Wall Street had forecast. 'It's not surprising asset levels have held on and grown,' said Michael Bird, senior fund manager at Allspring Global Investments. 'Even if the Fed picks up its easing campaign this year, rates will still be relatively high.' The Fed last week laid out forecasts for two quarter-point rate cuts this year, aligning with market pricing. Although the risk that conflict in the Middle East drives up oil prices and causes a resurgence in inflation remains an uncertatinty, traders see a quarter-point reduction as likely in September and all but guaranteed by October. Given that interest-rate backdrop, money-market funds are trying to extend the weighted-average maturity — known as WAM — of their holdings as long as possible to capture elevated yields. Fund managers have also adjusted holdings to compensate for the effects of debt-ceiling drama. While Wall Street strategists largely expect the government to raise the debt limit as part of the reconciliation process by late of July or early August, some funds have put more cash toward repurchase agreements — loans collateralized by Treasuries or agency debt — as an alternative. Still, 'the expectation is when the debt ceiling gets resolved, there will be a significant increase in bill issuance, which helps yields,' Bird said. 'Uncertainty is helping our product.' Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros The US Has More Copper Than China But No Way to Refine All of It Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
9 hours ago
- Business
- Yahoo
Investors Rush to Pour Cash Into $7.4 Trillion US Money-Market Fund Industry
(Bloomberg) -- The rush of cash into the US money-market funds is showing few signs of slowing as it secured a record $7.4 trillion in assets. Bezos Wedding Draws Protests, Soul-Searching Over Tourism in Venice One Architect's Quest to Save Mumbai's Heritage From Disappearing NYC Congestion Toll Cuts Manhattan Gridlock by 25%, RPA Reports Investors have poured more than $320 billion into the funds so far this year, according to Crane Data LLC, making it one of the biggest benefactors of the Federal Reserve's current monetary policy. That's something of a surprise for those on Wall Street who'd gone into 2025 assuming officials would lower interest rates and sap the attractive returns offered by the industry. '$7 trillion can easily be $7.5 trillion in 2025,' said Deborah Cunningham, chief investment officer for global liquidity markets at Federated Hermes. 'Five-percent-plus rates were nirvana, four-percent-plus is still very good — and if we dip down into the high threes, that's quite acceptable as well.' The average simple seven-day yield is now 3.95% for government funds and 4.03% for prime, an 8 basis point spread, according to Bank of America Corp. It's a compelling backdrop as some 600 participants gather at the annual Crane's Money Fund Symposium, which kicks off Monday in Boston. Money funds have seen their coffers swell in recent years, notably in early 2020 for their haven appeal and again as the Fed's rate-hiking cycle boosted yields. Even as the Fed pivoted to cutting rates last year, assets continued to rise, with these funds typically slower to pass along the effects of lower rates when compared to banks. Households have been a key driver of the inflows. Since the Fed started raising rates in March 2022, total assets under management in US money funds have swelled by roughly $2.5 trillion, and retail investors have accounted for about 60% of that, Investment Company Institute data show. Data from ICI exclude firms' own internal money funds, unlike Crane Data, which tracks the money market industry. Inflows have continued even as the industry sees some investors embrace alternatives, such as ultra-short funds in the fixed income or equities, Cunningham said. Overall, though, it's a far cry from the exodus of cash from money-market funds that some on Wall Street had forecast. 'It's not surprising asset levels have held on and grown,' said Michael Bird, senior fund manager at Allspring Global Investments. 'Even if the Fed picks up its easing campaign this year, rates will still be relatively high.' The Fed last week laid out forecasts for two quarter-point rate cuts this year, aligning with market pricing. Although the risk that conflict in the Middle East drives up oil prices and causes a resurgence in inflation remains an uncertatinty, traders see a quarter-point reduction as likely in September and all but guaranteed by October. Given that interest-rate backdrop, money-market funds are trying to extend the weighted-average maturity — known as WAM — of their holdings as long as possible to capture elevated yields. Fund managers have also adjusted holdings to compensate for the effects of debt-ceiling drama. While Wall Street strategists largely expect the government to raise the debt limit as part of the reconciliation process by late of July or early August, some funds have put more cash toward repurchase agreements — loans collateralized by Treasuries or agency debt — as an alternative. Still, 'the expectation is when the debt ceiling gets resolved, there will be a significant increase in bill issuance, which helps yields,' Bird said. 'Uncertainty is helping our product.' Luxury Counterfeiters Keep Outsmarting the Makers of $10,000 Handbags Is Mark Cuban the Loudmouth Billionaire that Democrats Need for 2028? Ken Griffin on Trump, Harvard and Why Novice Investors Won't Beat the Pros The US Has More Copper Than China But No Way to Refine All of It Can 'MAMUWT' Be to Musk What 'TACO' Is to Trump? ©2025 Bloomberg L.P.
Yahoo
12-06-2025
- Business
- Yahoo
U.S. debt-limit deadlock is making this favorite asset more scarce
The booming money-market-fund industry could soon face a shortage of its favorite assets to buy. The supply of Treasury bills, a kind of short-term debt used to fund the federal government, has been shrinking since January, when the U.S. hit its $36.1 trillion debt limit. I'm in my 80s and have 2 kids. How do I choose between them to be my executor? My friend, 83, wants to add me to his bank account to pay his bills. What could go wrong? Why Goldman Sachs says high-flying tech stocks may be headed for a tough stretch Gundlach says gold is no longer for lunatics as the bond king says wait to buy the 30-year 'It might be another Apple or Microsoft': My wife invested $100K in one stock and it exploded 1,500%. Do we sell? That matters because investors poured more than $7 trillion into U.S. money-market funds. The industry ranks as the second-largest group of investors in the $6 trillion T-bill sector, behind the category of households and others. T-bills are considered a cash equivalent because they tend to be liquid and mature in a year or less. But as the supply dwindles, competition for fewer assets increases, which can lead to shrinking yields. 'Cutbacks so far have been manageable,' Deborah Cunningham, chief investment officer for global liquidity markets at Federated Hermes, told MarketWatch. Yet she expects it to become more problematic the longer the debt-ceiling issue drags out. After the U.S. debt limit was reached in January, the Treasury began running down the supply of outstanding bills. Barclays analysts estimate the sector shrunk by $375 billion through May. See: Trump's Treasury is running out of money fast. Why the 'X date' matters for markets. The yield on the 3-month Treasury bill BX:TMUBMUSD03M was at 4.35% on Wednesday, down from closer to 5.4% a year ago, according to FactSet data. The drop in yield largely traced the series of Federal Reserve rate cuts last year. While the bond market has been hyperfocused on the U.S. deficit, House Republicans passed a massive tax and spending bill in May that would add $4 trillion to the nation's debt limit, providing the U.S. more runway to borrow. The plan would add $2.4 trillion to the U.S. deficit over the next decade, with another $551 billion in debt-servicing costs over that time frame, according to the Congressional Budget Office. The Senate now must weigh in on the bill. As those negotiations continue, the supply of T-bills will keep shrinking and the U.S. will draw closer to its 'X date,' the estimated point at which the Treasury will have exhausted all its emergency cash-management strategies and won't be able to pay all of its bills on time. Some estimates put the X date around mid-August, but it has been a moving target based on tax receipts, tariffs and other factors. To offset dwindling T-bill supply, some money-market funds also can invest in somewhat longer-duration Treasury securities, repurchase agreements and other government-related assets. 'That opens up a much broader group of assets,' Cunningham said of many funds. A much smaller subset of funds were designed to only invest in short-term T-bills. With the major U.S. stock indexes SPX DJIA COMP back near record territory, many investors have been reluctant to move out of money-market funds and other cashlike havens. U.S. money-market funds hit a record $7.4 trillion in assets in the first week of June, according to Peter Crane, president and CEO of Crane Data. While weekly flows were expected to come under pressure around the June 15 tax-payment deadline, he said that could help offset some of the supply and demand issues in T-bills. 'You are not seeing the gigantic inflows of two years ago,' Crane added. 'But you will see inflows in the second half. That could become an issue then.' Ideally, the debt-ceiling issue would be resolved by then, unleashing the start of what Barclays analysts think could be a $1.4 trillion to $2 trillion deluge of new bill issuance through the end of 2026. Treasury Secretary Scott Bessent was expected to follow the recent trend and keep U.S. borrowing needs focused in shorter-term bill issuance. 'That will be a great thing. Right now, rates are lower than they should be in the Treasury market because of the cutback in supply,' Cunningham said. 'When the debt ceiling is finalized and bill supply resumes, that's a positive from a money-market-fund industry standpoint.' Fund manager who sold Tesla, just in time, says investors are overlooking these tech bargains My life partner is 18 years my senior. He wants to leave his $4.5 million fortune to me — not his two kids. Do we tell them? 'I prepaid our mom's rent for a year': My sister is a millionaire and never helps our mother. How do I cut her out of her will? The S&P 500 is nearly back to record highs, but investors shouldn't get too comfortable Value investing is finally excelling again in 2025 — but there is one catch for Americans Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
