Reuters posted, "Column: Shadow bank boxing as money funds drain deposits." The piece states, "Cash-like money funds could increasingly suck deposits from smaller U.S. banks until lagging bank savings rates are finally forced up to compete while the Federal Reserve keeps rates high for the rest of the year. Part of the so-called 'shadow bank' complex of non-bank financial institutions, money market funds invest largely in Treasury bills and securities yielding more than 4% for the first time in 15 years and are now far outshining what many banks are offering on deposit. A migration towards them is only peculiar in how long it took to happen." Reuters tells us, "The latest dash to these cash funds is likely a mix of unnerved depositors and institutional money fearful of the fallout for riskier assets more generally -- but the scale of the movement in recent weeks is eye-popping. According to mutual fund data, U.S. money fund assets under management soared by about $312 billion in the month through last week and hit a record $5.132 trillion. Outside the historic cash scramble surrounding the pandemic in 2020, that was the biggest annualised monthly move to these investment bunkers since the bank crash unfolded in 2007." The article adds, "Savings deposit rates vary across the system between the near-zero rates at large banks still awash with deposits to slightly higher rates at small- and mid-sized banks now struggling to retain savings. But, in contrast to money funds, the average rate across all of them, according to the Federal Deposit Insurance Corporation, is still just 0.37%. 'If the Fed is forced to hold rates higher for longer than the market is pricing, pressure on net interest margins will likely continue as banks have to keep paying up to retain deposits," William Blair Investment Management told clients. 'The expansion in net interest margins that regional banks have enjoyed over the last several years is likely not to continue.'"

Email This Article




Use a comma or a semicolon to separate

captcha image

Daily Link Archive

2024 2023 2022
March December December
February November November
January October October
September September
August August
July July
June June
May May
April April
March March
February February
January January
2021 2020 2019
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2018 2017 2016
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2015 2014 2013
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2012 2011 2010
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2009 2008 2007
December December December
November November November
October October October
September September September
August August August
July July July
June June June
May May May
April April April
March March March
February February February
January January January
2006
December
November
October
September