Money Market Yields Fall From Flood of Bond Flight-to-Quality Cash. Expect money market mutual fund yields to continue inching lower in coming days as cash continues to "get short". Declines in longer-term bonds and issues with mortgage hedge funds and with esoteric fixed-income instruments are causing a flood into the money markets, driving yields lower. Continued volatility in stocks too is making "cash" very tempting in this environment. To date, the repo, ABCP and money markets have not been impacted by the mortgage and bond problems. Money market funds appear to have limited exposure to CDO debt, and no direct exposure to subprime CDO. Money funds also should benefit from the return of a yield curve, as they become able again to obtain higher-than-overnight yields.

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