Wells Fargo says in its latest "Overview, Strategy, and Outlook, as of November 30, 2009," "The main themes in the money markets did not change in November: low rates, contracting supply, and a conflict between issuers' desire to fund long-term and the need of money funds and other market participants to invest short-term. Throw an unexpected credit concern into the mix, and that pretty much sums up the month.... The money markets continue to be plagued by a persistent zero or near-zero interest rate environment.... Although balances in money market funds have been contracting this year, at $3.2 trillion they are still very sizeable and exceed their 2007 pre-credit crisis levels by a considerable amount. Based on asset flows, money fund investors continue to move from government and Treasury funds to prime funds and, at least in retail funds, from prime funds to longer-term investments." The piece, written by Portfolio Manager David Sylvester, adds, "Finally, what would the markets be anymore without a good credit scare thrown into the mix? On the day before Thanksgiving, Dubai shocked the markets with an announcement that it would seek to defer payments on a portion of the $59 billion in debt issued by Dubai World (DW) that is maturing in the near future.... Initially there was little information available, but it appears that there will be no direct impact on money market funds."
