Federated's latest "Month in Cash" is entitled, "Moving out on the curve". It says, "We're taking advantage of year-end opportunities in the marketplace, and we're seeing better pricing a bit further out the yield curve as we get past year-end, as well. As a result, we've decided to lengthen the weighted average maturity of our government money market funds. For quite some time, we had been targeting from 40 to 50 days, but we've lengthened that target to 45 to 55 days. The yield curve is shaped right now in a way that allows us to do that and retain a relatively good yield.... We're also watching concerns about the potential expiration of the FDIC's unlimited insurance on non-interest bearing checking accounts at the end of the year. A bill has been proposed to extend the coverage for two years, but there hasn't been a lot of traction, or even details, on that proposal. There might be some political backing for extending the coverage only for smaller community banks below a certain size level, where there might be some more concerns. Were the extension to fail, though, we could see large inflows into money funds at the end of December and beginning of January. And if, in fact, unlimited coverage expires, and we wait until late December or early January to go further out on the yield curve, we'd be left with less in the way of opportunities."
