Federated Investors' Debbie Cunningham writes in her latest Month in Cash, "As worries subside a bit, rates rise a bit," "As expected, benchmark U.S. interest rates remained anchored to virtually zero during the month of October as the Federal Reserve maintained its ultra-accommodative monetary policy that it initiated almost three years ago. However, market interest rates moved higher across the cash yield curve amid encouraging signs that the U.S. economy would avoid a double-dip recession and that the euro zone finally would resolve its long-festering sovereign debt crisis.... The Federal Reserve’s so-called "twist" operation, in which the central bank sells shorter-dated securities and uses the proceeds to buy longer-term paper, has been underway for about a month with little impact on the cash market so far. Demand for the roughly $9 billion of money-market eligible securities that the Fed has sold to date has been so strong that any upward pressure on ultra short-term yields has been minimal at most. However, we believe that Operation Twist could at least put a floor under overnight rates, thus supporting interest rates on repurchase agreements."
