Taxable Money Market Commentary
by Senior Portfolio Manager Patricia Larkin
This is Patricia Larkin with a Money Market Commentary for February, 2015.
The January employment report showed the U.S. economy adding a better-than-expected 257,000 jobs, following an upwardly revised gain of 329,000 in December. And while the unemployment rate ticked up to 5.7% from 5.6%, many analysts indicated this could be the result of previously discouraged workers making their way back into the job market. The overall report was seen by the markets as a sign that domestic growth was continuing at a solid pace, bolstering both consumer and business sentiment.
Following its latest Open Market Committee meeting on January 28, the Federal Reserve announced no change in monetary policy. While this outcome was widely expected, the markets are closely following every economic release in order to gauge when the Fed may remove the language indicating they can be “patient” in removing the extremely accommodative monetary policy put in place following the 2008 financial crisis. While inflation has remained well below the Fed’s 2% target, the continuation of solid economic growth increases pressure on the Fed to begin the normalization process.
In its statement the Fed directly mentioned that, among other things, they were keeping a close eye on financial and international developments. This was clearly a reference to the unsettled situation in the Eurozone. While the quantitative easing steps being undertaken by the European Central Bank should help ease financial conditions, the underlying political stresses of the currency union appear to have no easy or short-term resolution. Given the potential for an impasse in the Greek debt negotiations, we intend to follow our long-held conservative credit policy while seeking to maintain appropriate levels of liquidity.
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An investment in a money market fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although money market funds seek to preserve the value of an investment at $1.00 per share, it is possible to lose money by investing in a money market fund. Yield fluctuates and past performance is no guarantee of future performance.
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.