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Maturities remain short in anticipation of a December rate hike, says Moody’s

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Weighted average maturities remain tight, especially within US dollar money market funds (MMFs), says Moody’s and the firm expects managers to continue to maintain shorter portfolio WAMs as the likelihood of a December rate hike in the US increases.

Sterling MMFs' assets under management (AUM) hit their second lowest level in twelve months in the third quarter of 2015, registering a fall of 3.8 per cent to GBP93.1 billion. US prime funds recorded a 4 per cent growth in AUM, on the other hand, driven by a reduced appetite for risky assets; euro-denominated funds also experienced AUM growth, albeit smaller, of 2.3 per cent to EUR55.2 billion.
 
"Uncertainty about the health of the global economy led to a sharp increase in market volatility in the third quarter. This has reduced investor appetite for risky assets and driven growth in US prime funds,' AUM," says Robert Callagy, a Vice President – Senior Credit Officer at Moody's.
 
"For euro prime funds, investors have adapted to the new net negative yield environment affecting those funds since the middle of Q2," adds Vanessa Robert, a Vice President – Senior Credit Officer at Moody's.
 

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