Liquidity Insights Overview

Liquidity Insights

Discover our vast array of liquidity insights covering global investment news and trends that may impact your cash portfolios

Global Liquidity Investment Academy

LATEST LIQUIDITY COMMENTARY

Proceed with caution: Fed keeps rates on hold

The FOMC unanimously decided to make no changes to the 5.25%-5.50% federal funds target range. Interest on reserve balances (IORB) and the overnight reverse repurchase agreement (RRP) rate were also left unchanged at 5.40% and 5.30%, respectively

Time to step out

The rise in interest rates over the last two years has been dramatic. UK interest rates have risen at the sharpest pace since the 1980s, while rates in Europe have rapidly increased from negative territory to the highest level since the inception of the euro. Evidently, this sharp rise in rates is good news for corporate treasurers.

BoE hits pause on hikes for now

At its September 2023 meeting, the Monetary Policy Committee (MPC) maintained Bank Rate at 5.25% in a split 5-4 decision, while unanimously deciding to reduce the stock of UK government bond purchases by £100 billion over the next twelve months.

ECB raises rates once more, taking the deposit rate to a record high

At its monetary policy meeting on 14 September 2023, the European Central Bank (ECB) tightened monetary policy further, increasing key interest rates by 25 basis points (bps).

China banks navigate property downturn

For the past three decades, the property sector has been a key driver of Chinese economic growth. While the recent property downturn in China has created challenges for the banks’ operating environment, the banks’ credit profiles likely remain resilient in the future.

PBoC RRR cut – A strong dovish policy signal

On 14 September 2023, the People’s Bank of China (PBoC) announced a broad based 25bps Reserve Requirement Ratio (RRR) rate cut. The timing and the shortness of the notice period was unexpected.

RBA: Unchanged at Governor Lowe's last call

At Governor Lowe’s last monetary policy meeting as head of the RBA, the bank decided to leave the Overnight Cash Rate unchanged at 4.10%. This was widely expected by economists following slightly softer economic data and a recent decline in monthly inflation.

PBoC cuts MLF again as economic data continues to disappoint

On 15 August 2023, the People’s Bank of China cut its 1-year Medium Term Lending Facility by 0.15% to 2.50% and its 7-day open market operation repo rate by 10bps to 1.80%.

On the Fitch Downgrade

On August 1, 2023 Fitch downgraded the United States of America’s long-term credit rating one notch, from AAA to AA+.

BoE slows the pace of hikes with rates rising to 5.25%

The Bank of England (BoE) opted to raise Bank Rate by 25 basis points (bps) to 5.25%, as a recent cooling in both inflation and the economic outlook allowed it to moderate the magnitude of its hike from the 50bps delivered in June.

Reserve Bank of Australia – Pausing on optimistic forecasts

At its monetary policy meeting on 1 August 2023, the Reserve Bank of Australia decided to leave the Overnight Cash Rate unchanged for a second month. This follows a cumulative 400bps of rate hikes over the previous fifteen months, which has taken base rates to a decade high of 4.10%.

ECB raises rates once more, but future decisions look finely balanced

At its monetary policy meeting on 27 July 2023, the European Central Bank (ECB) tightened monetary policy further, increasing key interest rates by 25 basis points (bps).

Patient and resolute

The Federal Open Market Committee (FOMC) unanimously voted to raise interest rates 25bps. The new target range is 5.25%-5.50%—the highest level in more than 22 years—yet we may not have reached the peak.

SEC’s new rules for Money Market Funds will help investors and the industry

As the world’s largest provider of institutional money market funds, J.P. Morgan Asset Management welcomes the new amendments to rules governing money market funds (MMFs) announced by the Securities and Exchange Commission (SEC) on July 12.

Reserve Bank of Australia – A pause to assess

At its monetary policy meeting on the 4th of July, the Reserve Bank of Australia left the overnight cash rate unchanged at 4.10%. This represents the second pause in the central bank’s current hiking cycle.

BoE switches back up a gear as rates hit 5.00%

The Bank of England (BoE) raised Bank Rate by 50 basis points (bps) to 5.00% as recent upside in data indicated more persistent inflationary pressures and justified a 13th consecutive increase.

Don’t call the Fed’s action a pause (or a skip)

The FOMC kept the target range for the federal funds rate at 5.00%-5.25%. The interest rate on reserve balances (IORB) and the overnight reverse repurchase agreement (RRP) rate were also left unchanged at 5.15% and 5.05%, respectively.

ECB hikes for an eighth time

At its 15 June 2023 monetary policy meeting, the ECB increased all three key interest rates by 25bps, bringing the refinancing rate to 4.00%, the marginal lending facility to 4.25% and the deposit facility rate to 3.50%.

PBoC reinforces its dovish stance

In a widely anticipated move, the Peoples Bank of China cut its 1-year Medium-Term Lending Facility by 10bps to 2.65% on the 15th of June. The action follows a 7-day Repo cut and a Standing Lending Facility rate cut last week and highlights the central bank’s decisively dovish pivot as the authorities seek to stabilize China’s faltering economic recovery.

PBoC’s small, yet clear dovish signal

At its 13th June Open Market Operation, the People’s Bank of China (PBoC) cut its 7-day Reverse Repo Rate by 10bps to 1.90%. The repo rate is a key tool used by the central bank to ensure adequate market liquidity, this also represents the first repo rate cut since August 2022.

The RBA surprises as inflation trumps growth

At its 6 of June Monetary Policy Meeting the Reserve Bank of Australia (RBA) raised its Overnight Cash Rate (OCR) by 25bps to a new cycle high of 4.10%. The rate hike surprised investors, who were expecting additional rate hikes following the RBA’s hawkish pivot at its May Monetary Policy Committee (MPC) meeting but remained uncertain as to the exact timing of any RBA action.

What happens when Hong Kong’s Aggregate Balance hits zero?

Since February this year, the Hong Kong Dollar (HK$) has hit the weak side of its convertibility versus the US Dollar (US$) on multiple occasions. This has necessitated ongoing foreign exchange intervention by the Hong Kong Monetary Authority (HKMA) to support the HK$.

The impact of a technical default by the U.S. Treasury

Christopher Tufts, Global Head of Liquidity Strategies discusses the impact of a technical default.

BoE hike in May, recession gone away

The Bank of England (BoE) raised the Bank Rate by 25 basis points (bps) to 4.50% in a split 7-2 vote as the Monetary Policy Committee (MPC) believes persistent inflationary pressures and a tight labour market justified a twelfth consecutive increase.

ECB slows hikes, but has “more ground to cover”

At its 4th of May monetary policy meeting, the ECB increased all three key interest rates by 25bps, bringing the refinancing rate to 3.75%, the marginal lending facility to 4.00% and the deposit facility rate to 3.25%.

The U.S. debt ceiling: Latest thoughts and updates

The U.S. federal government reached its debt limit - Commonly called the “debt ceiling”, the debt limit is the maximum amount of debt that the U.S. Department of the Treasury can issue to the public or to other federal agencies.

The RBA’s narrowing path to a soft landing

At its monetary policy meeting on May 3, the Reserve Bank of Australia (RBA) surprised the market by hiking its Overnight Cash Rate by 25bps to 3.85%. Justifying its abrupt volte-face, the central bank said “inflation… is still too high and it will be some time yet before it is back in the target range”.

MAS pauses as growth outlook dims

Following its semi-annual monetary policy meeting on April 14, the Monetary Authority of Singapore (MAS) left its prevailing monetary policy unchanged – including the slope, width and center-point of the band – unchanged. This represents the central bank’s first pause since it began tightening its policy in October 2021.

RBA - On hold for now

On 4 April, the Reserve bank of Australia (RBA) decided to leave the Overnight Cash Rate unchanged at 3.60%. This represents the first pause by a major central bank and follows a cumulative 350bps of hikes over the past ten consecutive meetings.

The Fed’s balancing act

The FOMC maintained its firm stance against inflation by raising interest rates 25bps to 4.75%-5.00%, despite heightened financial stability risk. Interest on reserve balances (IORB) and the overnight reverse repo rate (RRP) were also increased by equivalent amounts to 4.9% and 4.8%, respectively.

Bank of England keeping options on the table

At its March 2023 meeting, the Monetary Policy Committee (MPC) raised the Bank Rate by 25bps to 4.25%, the highest level since November 2008. The increase was largely expected by the market despite recent global financial market volatility.

PBOC RRR cut – Front Loading Policy Support

On Friday 17th March, the People’s Bank of China (PBOC) announced a broad-based 25bps Reserve Requirement Ratio (RRR) rate cut, releasing additional liquidity into the banking system and reducing commercial bank funding costs.

ECB sticks with 50bps hike, despite market turmoil

The European Central Bank (ECB) acted on February’s forward guidance by increasing key interest rates by 50 basis points (bps), despite current market volatility.

Reserve Bank of Australia - A pivot to less hawkish

At its monetary policy meeting on the 7th of March, the Reserve Bank of Australia (RBA) hiked its Overnight Cash Rate by 25bps to an eleven-year high of 3.60%. The rate hike was widely anticipated following last month’s hawkish pivot.

Is it time to rethink cash investing?

Money market funds are providing investors with the highest yields in 15 years while offering liquidity and stability of principal

Hong Kong Interest Rates – rational confusion

The HKMA intervened to defend the peg and purchased HKD 19bn on February 14-15. This has reduced its aggregate balance to HKD 77bn, the lowest level in almost three years.

RBA – No pause yet

At its first monetary policy meeting of 2023, the Reserve Bank of Australia (RBA) raised its Overnight Cash Rate by 25bps to 3.35%. The move represents the ninth consecutive hike in the current cycle, and the accompanying statement was more hawkish than expected.

ECB stays the course towards inflation reduction

The European Central Bank raised its key interest rates by 50 basis points, in line with expectations to a 15-year high of 3.00%. In the accompanying statement and subsequent press conference, the ECB maintained its hawkish tone, signalled an intention to increase rates by a further 50 bps in March.

UK turns a corner but risks remain large

The Bank of England raised the Bank Rate by 50 basis points to 4.00% in a split 7-2 vote as a tight labour market and continued domestic wage and price pressures justified a tenth consecutive increase.

On The U.S. Debt Ceiling

To prevent the United States from defaulting on its payment obligations, the Treasury will now be forced to utilize its cash balances and take steps towards “extraordinary measures.”

Downshift, but still hiking

The FOMC unanimously decided to downshift to a smaller but, in the words of Fed Chairman Jerome Powell, “still historically large increase” of 50 bps.

PBoC cuts RRR – A renewed dovish signal

On Friday 25 November, the People’s Bank of China announced a 25bps Reserve Requirement Ratio cut. In the accompanying statement, the PBoC confirmed the RRR cut was part of a package of measures to support economic growth.

Fed - The lag effect

The FOMC showed once again that it is prepared to take interest rates into sufficiently restrictive territory in order to clamp down on inflation. For the fourth consecutive meeting, it unanimously decided to increase its Federal Funds target rate by 75bps to a range of 3.75%-4.00%. Interest on reserve balances (IORB) and the overnight RRP were also increased by equivalent amounts to 3.80% and 3.90%, respectively.

A divided Bank of England delivers 50bps as rates rise to 2.25%

The Bank of England raised the Bank Rate by 50 basis points to 2.25% in a split 5-3-1 vote as the tight labour market, higher wages and higher domestic inflation justified a seventh consecutive hike.

PBOC attempts to jump-start the economy

On August 15, the People’s Bank of China announced a MLF rate cut of 10bps to 2.75%. Although small in size, the rate cut confirms the PBOC’s desire to jump-start the economy and sends an important monetary policy signal with significant implications for interest rates and RMB cash investors.

When does unusually large become usual?

On July 27, the Federal Open Market Committee (FOMC) raised its Federal Funds Rate target range by 75 basis points (bps) to 2.25% - 2.50%. There were no dissenters.

Fed lift-off

On 15-16 March, the Federal Open Market Committee (FOMC) held its two-day meeting and raised its federal funds rate target range by 25 basis points (bps) to 0.25%-0.5%, with one dissenting member calling for a 50bps increase.

Monetary Authority of Singapore – Cautious optimism as recovery continues

At their latest semi-annual policy meeting, the MAS' comments was modestly upbeat and the central bank revised up their headline inflation target - both of which could have implications for SGD cash investments.