As money flows into high-quality assets such as U.S. Treasurys, money funds invested in those securities could see more inflows.
Anthony Carfang, a partner at Treasury Strategies Inc., said that new banking regulatory rules could aid the funds. He explained that international bank rules are forcing banks to hold more in U.S. Treasurys, which could reduce the number of the bonds in circulation, as more investors seek the bonds as safe havens.
Money funds, which are large holders of U.S. government bonds could therefore find it lucrative to lend out their holdings of bonds for investors who need the securities for the short term.
“It’s an opportunity, not a risk,” he said.
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