COVID | Credit | FX | Monetary Policy & Inflation | US
In money markets, months, quarters, and even years can pass with little fanfare. And then all of sudden, a new regime sprouts up and events shift rapidly. In my opinion, we have entered such an environment post the Fed’s emergency 50 bps rate cut. The dilemma is that the fuse is much shorter this time versus prior cycles following last year’s ‘insurance cuts’ – and also because the Fed barely made it to the half-way point in rates compared with prior tightening cycles. This, coupled with less short-term (S/T) investments relative to long-term (L/T) securities and the likelihood for cash to remain in demand if market vol stays high, may add to the angst.
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