Global Banking & Finance Review writes "The US liquidity landscape: Navigating uncertain times." They tell us, "The COVID-19 pandemic continues to have severe effects on the US economy, with historically low interest rates driving businesses to reconsider their cash management strategies. In this volatile liquidity landscape, how can businesses successfully navigate their operating cash goals? Tom Meiman, Product Line Manager for Liquidity Balances and Demand Deposit Account Services, BNY Mellon Treasury Services, and Sam Schwartzman, Head of the IMG Cash Solutions Group, BNY Mellon Markets, explore. Over the past decade, US liquidity has been significantly affected by short-term low interest rates, imposed following the 2008 global financial crisis. In 2015, the US dollar strengthened against other major world currencies and rates began to increase slowly through 2018, followed by some modest reductions in 2019." The piece continues, "Although the regulatory actions have provided valuable relief, market participants face considerable challenges, with the forecast for short-term market rates remaining uncertain. Following the initial phase of the crisis, T-bill rates were steadily rising, but have since flattened and have even begun to decline. If T-bill rates trend upwards again, and banks begin to move deposits away from the Fed into the T-bill market in search of yield, a near term cap could be put on these rates. Elsewhere, LIBOR rates have been somewhat flat of late after blowing out in March and April and then coming back down to (in some cases) historically low levels. We do expect them to remain relatively flat going forward, assuming a resurgence of the market volatility seen in March and April does not occur. MMF yields are still on a downward trajectory, and have generally not bottomed out yet, because the funds are somewhat benefitting from holding securities purchased in March – prior to when the two Fed interest rate cuts took effect. This lag effect will run its course shortly." It asks, "What tools can cash managers employ to effectively optimise their excess operating cash during these volatile times? Due to the recent turbulence in the market, there has been an influx of cash into the short-term market space, with a focus on bank deposits through several different options. Demand deposit accounts have been a cash management staple for decades.... Off-balance sheet investment options may be equally viable for some cash managers and can prove valuable to different clients at different times. Another popular option is the Fixed Income Clearing Corporation (FICC) SMP repo program, which has been heavily utilised in recent years."

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