Aug
01
A $400 Billion Influx Squeezes U.S. Bond Market’s Safest Asset
By-
Money-market funds must abandon $1-a-share NAV in October
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Treasury may introduce two-month bills to cope with demand
The U.S. government’s attempt to alleviate the short supply of T-bills is about to get a little harder.
After years in the making, a post-crisis rule to prevent a run on the money-market industry will finally take effect this October. It will force funds that oversee about $600 billion to abandon a fixed $1-a-share price and float their net asset value. But because businesses and state governments treat the funds like bank accounts, the prospect of prices falling below a buck is causing a big shift into money-market funds that buy only government debt…
A $400 Billion Influx Squeezes U.S. Bond Market’s Safest Asset
