Fed rate hike seen as irrelevant in US$2.6t slice of debt market
Unprecedented shortfall in Treasury bills expected to keep money-fund rates low
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THE blowout US jobs report for October means the Federal Reserve may be weeks away from raising interest rates. For US savers earning next to nothing on US$2.6 trillion of money-market mutual funds, the move will barely register.
The reason is that there's an unprecedented shortfall in the safest assets, especially Treasury bills - a mainstay of money funds and traditionally the government obligations that are most sensitive to changes in Fed policy. The shortage means some key money-fund rates will probably remain near historic lows even if the central bank raises its benchmark from near zero next month.
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