Reuters writes "US bank cost may raise on money fund move - Barclays". The piece says, "U.S. bank borrowing cost could spike higher in the coming weeks, if money market mutual funds were to put more cash into Treasury bills and repurchase agreements rather than bank commercial paper, Barclays Capital said on Wednesday." It quotes Abate's research note, "Given the importance of money funds in providing bank funding, we believe a modest reallocation away from bank paper and toward repo and bills could have a significant effect on Libor." Reuters adds, "The $2.9 trillion money market fund industry is a key source of short-term financings for banks. Their reluctance to invest in commercial paper issued by banks and other companies in the wake of the collapse of Lehman Brothers exacerbated the global credit crisis in September 2008." In other news, Federated Investors' Debbie Cunningham writes "Rate lows are in the rearview mirror" in her latest "Month in Cash" commentary. She says, "Cash yields crept steadily higher throughout the month as investors continued to anticipate the onset of a new monetary tightening cycle in the United States." Finally, see "State Street Launches New Suite of Services for Money Market Funds."
