We got the number that we were hoping for–at least I did. A producer price index that was either on target or maybe a little cooler than forecast. It helped equities and interest rates for an hour or two–but now equities are red and nearly 1% off the high. Let’s face it–for now the bloom is off the rose and folks are loving money market funds.
The balances in money market funds just keep climbing—for the week ending January 8th MM funds increased by $66 billion. With MM rates now in the 4.2% to 4.45% area it is easy to understand why folks are parking cash there. I hold the Gabelli US Treasury Money Market (GABXX) and it has a 7 day yield of 4.39%–I am happy at that level and am guessing it will be available for many months to come.
Money market fund balances historically have been relatively steady, but ever since the pandemic they have gone into hyperdrive mode–pushing ever higher. The dry powder to push baby bonds and preferreds higher is massive, but can’t/won’t happen with the Fed Funds at current levels–it needs a spark to ignite that move and with short term rates remaining at current levels there is no spark.
Today I sit and study. Are there any more short duration-high yield issues I want to buy? We’ll see.
Dow rises more than 200 points on Tuesday after wholesale inflation report comes in light: Live updates-cnbc
See just never pays to predict. But that still leaves plenty such as assessing what preferreds and baby bonds are offering today and whether they seem safe. And any concerns about safety of previous buys. Just my 2 cents.
Up 200 now- who knows where it goes….
Tim- hope you received my donation from last night – via paypal.