AFP on Liquidity in Flux, Survey
The Association for Financial Professionals (AFP), which will be hosting its AFP25 Annual Conference in Boston October 26-28, published a brief titled, "Liquidity in Flux: Prioritizing Safety in Uncertainty." They ask, "How are companies responding to today's uncertainties? According to the 2025 AFP Liquidity Survey, underwritten by Invesco, organizations managing short-term investments are keeping safety a top priority. The results also highlighted a continued preference for traditional cash management vehicles, with interest-bearing deposit accounts (and time deposits) leading the pack, followed by government money market funds and treasury securities. In a companion webinar to the 2025 AFP Liquidity Survey, a panel of experts discussed the implications of the survey findings for treasury professionals. Tariffs and trade policy are new territory for many practitioners. Laurie Brignac, Chief Investment Officer for Invesco, underscored just how unusual this development is. 'This is the first time in my entire career [30+ years] that we’ve even talked about tariffs,' she said." The article tells us, "Marcel Santiz, Treasury Director for Masco Corporation, noted that his company expects tariffs to reduce cash flow through higher costs and weaker consumer demand. 'The overall cash impact is, we would expect to be down because we're paying tariffs that we were not paying before,' said Santiz. While they plan to maintain year-end cash targets, tariffs and their impacts may reduce foot traffic at retail, which could result in headwinds." AFP explains, "Money market funds are enjoying historic levels. Assets recently reached $7.4 trillion, and panelist Peter Crane, President and Publisher, Crane Data, predicted they could climb to $8 trillion by year-end. The combination of safety and favorable yields has drawn both retail and institutional investors, especially as bank deposits plateau. 'Nobody really has to fight for yield right now,' said Crane. 'All of a sudden, you've got 5%, now 4%, and everybody's happy with those levels.' Government and treasury funds alone are offering levels not seen in years. Even if rates decline, the lag in money fund repricing means they will remain competitive, retaining their status as a central tool in corporate liquidity management. With the debt ceiling lifted, U.S. Treasury bill issuance is ramping back up, providing ample supply for money market funds. This alleviates concerns about a shortage of safe, short-term instruments." Finally, the piece says, "While there is plenty of growing interest in stablecoins, tokenized funds as collateral tools and EFTs, the panel agreed they are early-stage experiments. 'There's a lot of smoke,' said Crane. 'There's probably a little fire at this point, but there's so much smoke in there.' Santiz explained that he would be reluctant to pursue such investments due to counterparty and liquidity risks, especially given past experiences with alternative assets.... Brignac added that tokenized funds are currently structured as share classes of government money funds, making them stable-value products, but adoption will depend on building trust and demonstrating clear use cases. 'Stay tuned,' said Crane. 'There are a lot of developments there.' For more on the AFP Liquidity Survey, see our June 25 News, "More AFP Liquidity Survey: Bank Deposits, Money Funds and T-Bills Rule," and our June 20 News, "AFP 2025 Liquidity Survey: MMFs Inch Higher; Deposits, T-Bills Lower."
