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Central Markets by Robert Lloyd, CFA

The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the  information cannot be guaranteed. All opinions and outlooks are subject to change.

  • Robert Lloyd, CFA

Money Market Funds Park Cash At The FED. What gives?

We are up to $800 billion in cash parked at the Fed using the reverse-repo facility. At the same time, Fed rates for IOER and overnight repo were both raised last week by the FOMC. What do you think is happening?

My own view is that the money market funds are swimming in cash because stock and bond investors find the current market prices unattractive. Additionally, the US Treasury department has been required since 1Q21 to draw down its cash balance, so there are fewer short term US bonds for money market funds to buy. Banks have been parking QE generated reserves at the Fed for years. Have we hit a point where Fed provided liquidity is just circling back to itself? It sure seems that way today. Oh, and by the way, the Fed did raise interest rates last week.

Robert Lloyd, CFA®

Chief Investment Officer

Lloyds Intrepid Wealth Management

Lloyds Intrepid LLC is doing business as Lloyds Intrepid Wealth Management. Lloyds Intrepid LLC offers investment advisory services in the State of Texas where registered and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. Lloyds Intrepid LLC and its advisers do not provide legal, tax or accounting advice. Lloyds Intrepid LLC formulates retirement plans, investment strategies, portfolio construction and investment due diligence for clients with signed investment advisory agreements with us. The information contained herein has been obtained from sources believed to be reliable, but the accuracy of the information cannot be guaranteed. All opinions and outlooks are subject to change.

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