Bloomberg on Dearth of T-Bills
Bloomberg writes, "The $900 Billion Influx That's Wreaking Havoc in U.S. Bills." The article says, "For all the anxiety over the global selloff in bonds, the big worry in money markets is the havoc being created by a dearth of U.S. Treasury bills. The magnitude of the problem was on display last week, when not even the Treasury Department's surprise announcement to boost sales could do much to lift bill rates. Over the past two weeks, some of those rates have turned negative, reaching levels last seen during the financial crisis. With supply at multi-decade lows, investors are signaling alarm as regulations intended to shore up banks and prevent a run on money-market funds exacerbate the bill shortfall. JPMorgan Chase & Co. expects an extra $900 billion of demand for government securities during the next 18 months, putting pressure on a sizable chunk of the $1.4 trillion bill market. "You have all this money that wants to be in liquid, safe assets that is overwhelming the supply," said Alex Roever, the Chicago-based head of U.S. interest-rate strategy at JPMorgan. The consequences extend well beyond the fixed-income market as depressed rates in the $2.5 trillion money-market fund industry stand to deprive savers of income long after the Federal Reserve starts raising interest rates. The mismatch between supply and demand has been so acute that four-week bill rates fell to minus 0.0304 percent on April 29, the lowest on a closing basis since December 2008. Yields on three-month bills also turned negative. The Treasury responded by saying at its quarterly refunding announcement on May 6 it would increase issuance to meet growing demand." In other news, Tech in Asia wrote the article, "Xiaomi's Money Market Fund Rolls Out of Beta, to Take on Alibaba and Tencent." It says, "Like Baidu and Alibaba, Xiaomi is eyeing China's finance industry and seeing dollar signs. Today the company is officially launching a money-market fund called Huoqibao inside a new standalone app called "Xiaomi Finance". Like the Alibaba-affiliated Yu'ebao, Xiaomi's Huoqibao lets consumers save excess cash and earn interest from it.... The fund is managed by China's E Fund Management and currently offers an annual return rate of 4.26 percent. Compared to China's other internet giants, Xiaomi is slightly late to the money market game. As of late 2014, Yu'ebao had over 185 million users and a fund size of RMB 578.93 billion (about US$93 billion). Yu'ebao's deep integration with Alipay Wallet, which is also tied to Alibaba's mobile ecommerce properties like Tmall and Taobao, make it tough for new customers to miss. Tencent and Baidu also have mobile money-market funds of their own."
