Barron's Says "Cash's Heyday Is Over"
Barron's says, "Cash's Heyday Is Over. Investors Need to Move On." The article comments, "Whether the Federal Reserve delivers another outsize rate cut at its next meeting or not, the time has come for investors to move out of big holdings of cash. Interest rates on money-market funds and other safe vehicles are falling.... Diminishing inflation gives the Fed more leeway to cut aggressively. After the numbers came out, the CME Group's FedWatch tool, which tracks interest-rate futures, showed 53% of odds of a half-point cut in November, up from 49% odds on Thursday. That would come on the heels of the half-point cut the Federal Open Market Committee delivered at its September meeting as it shifted from battling inflation to supporting employment and averting an economic slowdown." It tells us, "Rates have already begun to fall on some savings accounts and certificates of deposit. And yet, investors continue to pile into money-market funds. Total money-market-fund assets increased by $120.80 billion to $6.42 trillion for the week ended Wednesday, according to the Investment Company Institute. That is likely at least in part because yields are still attractive, but they will become less so over time. Money-fund yields have fallen from 5.06% on Sept. 18, when the Fed cut rates, to 4.76% as of Thursday, as measured by the Crane 100 Money Fund Index, Crane Data's average of the 100 largest taxable money funds. They should drift lower still over the next few weeks as the cut works its way through money-market funds, before pausing around 4.60% before the Fed moves again, says Peter G. Crane, president and publisher of Crane Data." The piece quotes, "'It's not too late' for investors to trim their cash exposure, says Gargi Chaudhuri, chief investment and portfolio strategist for the Americas at BlackRock. If investors are too slow to move, however, they'll miss out on today's opportunities in bonds and fixed income."
