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Cash! The Government Kind
Investors rushed to safe cash over the past week like there was a pandemic afoot.
As one US rates team put it recently, the silver lining to bank "contagion" is that it's not an actual, biological pathogen, but between broad risk aversion and the allure of very high yields on very safe government money market funds, the flight to "cash" was on par (get it?) with that seen in an around the original COVID panic.
For example, ICI data showed US money market fund assets swelling almost $121 billio
The palpable fear that this flight to cash embodies makes me want to look into some opportunities, even if we can decline further (which I believe we will), this much aversion to risk is enough to make me a bit of a contrarian on some areas of the market, that much cash won’t stay in money market funds forever.
Need to find the right ‘alpha’ to ‘hide’
So in theory this generally helps with bank liquidity issues via deposits no?