Dreyfus recently posted a (Dec. 22) brief entitled, "Money Market Commentary provided by Senior Portfolio Manager Patricia Larkin". It says, "At the final Federal Reserve Open Market Committee meeting of the year, the Fed reiterated its plan to hold overnight interest rates steady while purchasing $600 billion in longer-term Treasury securities. The Fed is responding to a domestic economy that, while growing, is expanding at a pace which has left unemployment stubbornly high, hovering near 10%. On the positive side, the recently passed tax bill has reduced uncertainty for both consumers and businesses and led most economists to boost their 2011 forecasts with most expecting continued acceleration from the just reported 3rd quarter GDP growth rate of 2.6%.... While U.S. consumers have made good progress in paying down their own debt during the downturn, the same cannot be said at the federal, state or local levels. This same scenario is also seen in other parts of the world as Europe faces a challenge to its traditional levels of social spending as well as the question of whether the Euro can survive under the current format. In this environment, we have continued our long-time focus on investing in large systemically important institutions and programs which we have carefully reviewed. In addition, we maintain high levels of overnight liquidity in our Prime funds. Our weighted average maturity has, for the most part, been shorter than the industry average as we believe funding levels may rise in the New Year as significant amounts of short-term debt need to be refinanced. As we look forward we will continue to closely monitor the institutions and programs in which we invest. We will position the funds taking into account our economic outlook while maintaining appropriate liquidity and our focus on credit quality."
