money market funds

Today is a bit of a potpourri because I have three different unrelated topics to discuss and one review item. But I'll make it (relatively) short. I have the most to say about Germany.

I know it's pure folly to predict what the Fed is likely to do on a FOMC meeting by meeting basis. But hear me out. Despite the fact that I see the Fed looking to remain as tight as they can reasonably be in order to save up firepower for…

Below is the full text of a speech by Federal Reserve Governor Daniel Tarullo on regulation of non-bank financial institutions.

Once again, savers are punished - they either have to take risk (such as rate or credit risk) or live with 5bp (or less). Money markets simply have not benefited from higher interest rates.

Today, it is euro banks that are the problem. For example, Goldman Analyst Alan Brazil suggests that euro banks need $1 trillion in additional capital. This has created distress in funding markets, particularly because of US money market…

Andy Lees argues insufficient dollars are getting into the system from the US current account deficit to finance the growth in global trade, so the stock of these international dollars is falling relative to the value of world trade. He…

There has been a net withdrawal from US money market funds and it appears that the funds have moved to strictly US Treasury or US high grade money market funds. Banks appear to be responding by hedging/securing funding through yen swaps. In…

The fact that this withdrawal of liquidity has already begun, though, does make the situation more acute. The question is what to do about it. It seems to me that the present path is not instilling a sense of confidence in investors.

The following report by Fitch from Tuesday highlights the cross-Atlantic channel through which credit market volatility could spread. US money markets have significant exposure to the European banking system. The worry is that a Greek…

Below are extracts of a paper formulated by Thomas Hoenig, the President of the Federal Reserve Bank of Kansas City, to better regulate the US Financial sector. His overarching aim is to isolate core banking activities that are protected by…