Expect more money market jitters at year end: fund managers

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Investors should expect another bout of money market volatility as the banking s...

NEW YORK - Investors should expect another bout of money market volatility as the banking system’s year-end funding crunch approaches and the Federal Reserve has not arrived at a permanent fix for the problem, top bond market players said on Monday.

“I think the pressures will be similar at the end of the year, but the Fed has committed to a pretty big repo facility that they’ll deploy faster this time,” Anne Mathias, global rates and FX strategist at Vanguard, told the Reuters Global Investment Outlook Summit. “Part of the problem the first time is that it took them a while to get the facility going.”

The Fed has also begun buying $60 billion a month of Treasury bills to help replenish the stock of bank reserves, which had fallen too low this fall and proved insufficient at a time when financial institutions’ cash requirements were high.Peters said the Fed’s actions are providing only limited relief to an entrenched problem.

 

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