Fed Rate Cut May Drive Investors Away From Money Markets, Says Portfolio Manager
Portfolio Pulse from Michael Juliano
The Federal Reserve's recent 0.5% interest rate cut may lead investors to shift from money market funds to longer duration bonds. Money market fund assets decreased by $20.02 billion, with government and prime funds seeing significant outflows. ETFs like SHV, NEAR, BIL, and GSY saw slight gains, indicating a potential shift in investor preference.
September 20, 2024 | 8:10 pm
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SPDR Bloomberg Barclays 1-3 Month T-Bill ETF (BIL) went up 0.044%, indicating a modest shift towards short-term treasury bills.
BIL's slight gain suggests investors are moving towards short-term treasury bills, as the Fed's rate cut makes money market funds less appealing.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
Invesco Ultra Short Duration ETF (GSY) picked up 0.07%, reflecting a trend towards ultra-short duration bonds post-Fed rate cut.
GSY's increase indicates a shift towards ultra-short duration bonds, as investors seek alternatives to money market funds following the Fed's rate cut.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
BlackRock Short Maturity Bond ETF (NEAR) rose 0.06% as investors consider short maturity bonds more attractive post-rate cut.
NEAR's increase reflects a shift in investor preference towards short maturity bonds, as the Fed's rate cut reduces money market yields.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80
POSITIVE IMPACT
iShares Short Treasury Bond ETF (SHV) gained 0.05% following the Fed's rate cut, indicating a slight investor shift towards short-term bonds.
The slight gain in SHV suggests that investors are beginning to move towards short-term bonds as money market yields become less attractive due to the Fed's rate cut.
CONFIDENCE 90
IMPORTANCE 70
RELEVANCE 80