Reuters writes "Money funds repo activity may lag Fed's hopes". It says, "Money market funds may not participate in reverse repurchase activity as much as the Federal Reserve is hoping once the central bank begins the process of draining cash from the financial system. Investment managers at the funds may not consider reverse repurchase (repo) agreements, in which the Fed sells securities to counterparties with an agreement to buy them back at a later date, to be the best place to park their money, says Alex Roever, head of short-term fixed income strategy at JPMorgan Securities in New York." The article also says, "On Tuesday, U.S. short-term interest rate futures extended earlier losses as traders briefly priced in the expectation that the Federal Reserve will raise interest rates at the end of the year. Futures traders are now pricing in a 98 percent chance of an increase in December to the Fed's target rate for overnight lending between banks, fed funds futures trading at CME Group Inc's Chicago Board of Trade shows. This compared with an implied 82 percent chance of a year-end rate hike at Monday's close."
