Watch short term treasury rates and your money market rate go to zero

#2
#2
droski said:
Bloomberg.com: News

all these people selling these muni and taxable floaters are going to flood the money market and treasury funds. the days of your money market paying 4% will be long gone in a week or two.
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and they should be gone. banks can get their money much cheaper today. why on earth should they pay 4% unless they just like a negative arbitrage.
 
#3
#3
they make money on managing the money market fund (sometimes up to .4%), not on the spread between borrowing and lending. also these rates bring in investors which they can sell mutual funds, bonds, etc to.
 
#4
#4
droski said:
they make money on managing the money market fund (sometimes up to .4%), not on the spread between borrowing and lending. also these rates bring in investors which they can sell mutual funds, bonds, etc to.
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I understand the money market rates as marketing funds to attract "managed" capital, but at the end of the day, one has to be able to offset that expense with Repos or other investments to continue to pay the outsized return.
 
#5
#5
well taxable AAA floaters are currently at 4.2 to 4.3%. it really only teh short term treasury rates that have been dropping. also most of these funds hold paper with different maturities so the higher rates haven't rolled off yet. they wont pay a rate they can't afford, trust me. edit: unless you are talking about some of the online banking savings accounts which is completely different.
 
#6
#6
droski said:
well taxable AAA floaters are currently at 4.2 to 4.3%. it really only teh short term treasury rates that have been dropping. also most of these funds hold paper with different maturities so the higher rates haven't rolled off yet. they wont pay a rate they can't afford, trust me. edit: unless you are talking about some of the online banks which is completely different.
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I 100% agree. We might be saying the same thing. The rates that they can afford to pay have to go down.
 
#7
#7
it's amazing this isn't a bigger story. CNBC barely mentioned it. when these rates reset these municipalities are going to have to pay twice to four times their current interest. you are going to see more than a few have some serious financial issues.
 
#8
#8
droski said:
it's amazing this isn't a bigger story. CNBC barely mentioned it. when these rates reset these municipalities are going to have to pay twice to four times their current interest. you are going to see more than a few have some serious financial issues.
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you are going to see some tax hikes, period.
 
#9
#9
droski said:
it's amazing this isn't a bigger story. CNBC barely mentioned it. when these rates reset these municipalities are going to have to pay twice to four times their current interest. you are going to see more than a few have some serious financial issues.
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Probably because the reporters aren't smart enough to understand it, let along explain it to the general population.
 
#11
#11
i've had some of these floaters reset from 2.7% two weeks ago to 6-10% tax free. amazing. the short term muni market just COMPLETEY went into the tank, and close end fund short term financing tanked too. and no one notices. yet the market is up 300 points in two days.
 
#12
#12
jamesd1628 said:
Probably because the reporters aren't smart enough to understand it, let along explain it to the general population.
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more likely they don't understand how serious this is. they think it's just some rich people getting screwed. little do they know this stuff is used for every money market fund in the country, financing for every closed end fund, and financing for hundreds of billions worth of municipal projects (bridges, schools, museums, etc).
 
#13
#13
droski said:
more likely they don't understand how serious this is. they think it's just some rich people getting screwed. little do they know this stuff is used for every money market fund in the country, financing for every closed end fund, and financing for hundreds of billions worth of municipal projects (bridges, schools, museums, etc).
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I agree Droski, it is serious.
 
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