Taxable Money Market Commentary
by Senior Portfolio Manager Patricia Larkin
This is Patricia Larkin with a Money Market Commentary for April, 2015.
• The first quarter of 2015 ended with some concerns over the underlying strength of the U.S. economy. The March employment report was a major disappointment, with only 126,000 news jobs being created. Many other economic indicators showed a slowing in economic activity. Durable goods orders, automobile sales and the monthly purchasing manager reports all showed a marked slowdown from their previous levels. While the extremely harsh winter in much of the country is undoubtedly a major source of this weakness, it remains to be seen if the slowdown is transitory or a more lasting problem.
• Following the March 18 meeting of the Federal Reserve’s (Fed) policy-making Open Market Committee (FOMC), the Fed issued a statement indicating no immediate change in monetary policy. However, the statement was notable in that the Fed removed the statement, contained in prior FOMC statements, that it could be patient in beginning to normalize the stance of monetary policy. At her subsequent press conference, Chair Yellen specifically stated that they would not be impatient to raise rates either. The Committee will be looking at labor conditions, inflation indicators and readings on financial and international conditions in order to make their assessment of the proper stance of monetary policy.
• After years of virtual certainty regarding overnight interest rates, the remainder of 2015 might well bring a long-awaited increase in the federal funds rate. However, the FOMC stated that further improvement in the labor market and a belief that inflation will move back to its 2% objective over the medium term would be necessary before any rise in the federal funds rate. In our view, the fragility of the Eurozone, spreading unrest in the Middle East and continuing tensions with Russia are all factors which could further delay any move toward normalization. During this period we intend to follow our long-held conservative credit policy while seeking to maintain appropriate levels of liquidity.
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The statements expressed in this commentary are those of the author as of the date of the article and do not necessarily represent the views its affiliates. The views expressed are subject to change rapidly as economic and market conditions dictate of Dreyfus or, and the statements in the commentary should not be construed as an offer to sell or a solicitation to buy any security. The commentary is provided as a general market overview and should not be considered investment advice or predictive of future market performance. Contact Dreyfus or your advisor for more current information.