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Cracks emerging in money markets?

Posted: Tue Sep 17, 2019 11:40 pm
by Tortoise

Re: Cracks emerging in money markets?

Posted: Wed Sep 18, 2019 4:46 am
by Smith1776
Very interesting stuff.

This really brings back to my mind that old question that everyone has been asking for the past 10 years: what will be the cause of the next panic in financial markets?

I'm willing to opine here. I think the epicentre of the quake will be in China.

Re: Cracks emerging in money markets?

Posted: Wed Sep 18, 2019 8:59 am
by Kbg
I'm curious as to where all the negative interest stuff is going to go which to me is a crisis all by itself. It literally makes no economic sense. (Or if someone has seen a good explanation, please post it. I would enjoy reading about it.)

Perhaps it's as easy as there is soooo much money in the world created by the central banks that cash is now trash???

Re: Cracks emerging in money markets?

Posted: Wed Sep 18, 2019 9:21 am
by shekels
Kbg wrote:
Wed Sep 18, 2019 8:59 am
I'm curious as to where all the negative interest stuff is going to go which to me is a crisis all by itself. It literally makes no economic sense. (Or if someone has seen a good explanation, please post it. I would enjoy reading about it.)

Perhaps it's as easy as there is soooo much money in the world created by the central banks that cash is now trash???
Red Dollars and Green Dollars and who controls which. Got me thinking again on what is Money vs Currency.

https://www.macrovoices.com/podcasts-co ... s-podcasts

Re: Cracks emerging in money markets?

Posted: Wed Sep 18, 2019 10:23 am
by dualstow
Kbg wrote:
Wed Sep 18, 2019 8:59 am
I'm curious as to where all the negative interest stuff is going to go which to me is a crisis all by itself. It literally makes no economic sense. (Or if someone has seen a good explanation, please post it. I would enjoy reading about it.)

Perhaps it's as easy as there is soooo much money in the world created by the central banks that cash is now trash???
I know less than you, but just to get the conversation moving on NIRP, isn’t it to keep a population from excessive hoarding? And to keep banks lending? I guess the alternative would be for banks to charge a flat fee for money storage but maybe that’s only an illusory alternative.

They say the way to make money during Japan’s lost decade was to sell home safes.

Re: Cracks emerging in money markets?

Posted: Thu Sep 19, 2019 3:28 pm
by Tortoise
Fed intervenes in money markets for the third day in a row...

https://www.bloomberg.com/news/articles ... raight-day

Re: Cracks emerging in money markets?

Posted: Thu Sep 19, 2019 7:51 pm
by ochotona
How can this hurt Joe Average investors? I don't go around all day thinking about the repo market. Might MM funds "bust the buck"?

Re: Cracks emerging in money markets?

Posted: Fri Sep 20, 2019 12:21 am
by Tortoise
ochotona wrote:
Thu Sep 19, 2019 7:51 pm
How can this hurt Joe Average investors? I don't go around all day thinking about the repo market. Might MM funds "bust the buck"?
Since the repo market is apparently the "plumbing" of the banking world, it's not very sexy and hardly anybody (including us) pays much attention to it.

I really don't know enough about the repo market to know what would have happened if the Fed hadn't stepped in. All I know is that the Fed has injected $203 billion in the past three days, which is 48% of the size of the 2008 TARP program ($426 billion). And it may continue.

And yet this story is still just a blip in the headlines. Interesting.

Re: Cracks emerging in money markets?

Posted: Fri Sep 20, 2019 7:37 am
by pugchief
Fidelity MM (SPRXX) which generally yields 0.25% or so more than their Treasury MM (FZFXX) is now paying 0.1% less.

I wonder if there is more to be concerned about than we think?

Re: Cracks emerging in money markets?

Posted: Fri Sep 20, 2019 7:49 am
by dualstow
pugchief wrote:
Fri Sep 20, 2019 7:37 am
Fidelity MM (SPRXX) which generally yields 0.25% or so more than their Treasury MM (FZFXX) is now paying 0.1% less.

I wonder if there is more to be concerned about than we think?
Hmm, Vanguard Prime is still yielding more (2.08%) than Vanguard treasury MM (1.97%). Although, Prime’s expense ratio is 0.16% while treas is 0.09%.

Re: Cracks emerging in money markets?

Posted: Fri Sep 20, 2019 9:58 am
by jhogue
pugchief wrote:
Fri Sep 20, 2019 7:37 am
Fidelity MM (SPRXX) which generally yields 0.25% or so more than their Treasury MM (FZFXX) is now paying 0.1% less.

I wonder if there is more to be concerned about than we think?
Don't buy repos. Don't buy money market funds "juiced" with repos. Don't be sorry. Buy Treasurys.

Re: Cracks emerging in money markets?

Posted: Fri Sep 20, 2019 9:59 am
by shekels
ochotona wrote:
Thu Sep 19, 2019 7:51 pm
How can this hurt Joe Average investors? I don't go around all day thinking about the repo market. Might MM funds "bust the buck"?
Some institution(s) needed cash.
IF there was no short term cash for them to borrow well think possibly Lehman Brothers.
Liquidity is needed for the Market or there will be no Market.
I guess we will see months down the road, maybe what is all about.