Dreyfus' latest "Tax Exempt Money Market Commentary" says, "The Federal Reserve raised short-term interest rates a quarter percentage point on March 15 and continues to project additional rate increases for this year, thus moving the central bank into a new, more aggressive phase. The Federal Open Market Committee will carefully monitor inflation and employment developments. The next meeting is scheduled for May 2-3, 2017. The municipal market began 2017 with demand picking up, with limited new issuance enabling rates to drift slightly lower. We continue to maintain short and liquid portfolios, positioning the funds to take advantage of higher rates. We will continue to assess our current asset base and regularly communicate with our clients while anticipating their future cash management and liquidity needs." Director of Tax-Exempt Strategies Colleen Meehan explains, "As we move into the second quarter, we expect to see an increase in both variable-rate demand note (VRDN) and fixed-rate note issuance. This, combined with a rising rate environment, should see yields on tax-exempt money market funds increase. The Financial Markets Association (SIFMA) index continues to be range-bound since October as asset flows stabilized after the implementation of money market reform. The SIFMA index is a weekly high grade market index comprised of seven-day tax-exempt VRDNs produced by Bloomberg LLP. We expect these levels to remain attractive compared to similar taxable investments as outstanding VRDNs exceed total tax-exempt money market fund assets. As expected, one-year rates have backed up as funds continue to stay short and liquid with higher rates on the horizon."

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