Money Market Rates Are Lower, Yes. But Compared to What?

Published On Oct 18, 2024, 9:00 AM

The article discusses the ongoing popularity of money market funds, especially as interest rates from the Federal Reserve decline. Despite the Fed cutting rates, money market funds have attracted a significant influx of investments, reaching new highs with a total of $6.794 trillion in assets. The funds remain appealing due to their relatively high yields compared to traditional bank accounts and their liquidity, offering a safe place for investors to park short-term cash. The author notes that even with falling interest rates, these funds are likely to continue being an attractive option for investors looking to avoid risk.

Read full article

Stock Forecasts

MINTView MINT chart on TradingView

Positive

Given the current trends in money market funds and the likelihood of continued inflows due to falling interest rates elsewhere, investment in ETFs that focus on money market funds may perform well as investors seek safer, higher-yield options for their cash.

XLFView XLF chart on TradingView

Negative

As investors prioritize safety over riskier assets, traditional bank stocks may face downward pressure as the appeal for money market funds grows. Investors might shy away from bank stocks if they believe returns from cash-equivalent assets will match or exceed bank dividends.

Related News

Is the Trump Trade Back?

Oct 17, 2024, 8:11 AM

Market observers see signs that investors increasingly believe Donald Trump will win the election, but there may be alternate explanations for a shift in sentiment.

XLF

American consumers see debt delinquency risk rising, higher long-term inflation: NY Fed

Oct 15, 2024, 3:40 PM

The New York Fed found that consumers' expectations about missed debt payments edged higher in September for the fourth consecutive month, as some may face increased budget pressures.

XLP
XLF
GDX

Meet Michelle Bowman, the Fed Official Cited by JD Vance

Oct 15, 2024, 12:10 PM

Michelle Bowman, a Trump-appointed Fed official recently cited by JD Vance, has been gaining prominence.

XLF