Taxable Money Market Commentary
by Senior Portfolio Manager Patricia Larkin
This is Patricia Larkin with a Money Market Commentary for July, 2015.
The most recent employment report showed the U.S. economy added 223,000 jobs in June following a downwardly revised gain of 254,000 in May. While this report was slightly weaker than most forecasts, it was still within a range that indicates a continuing willingness on the part of employers to add to their permanent workforce. Most other economic indicators, including the purchasing manager’s index and home sales and auto sales are also pointing to a stronger economic picture as the second quarter ends and the second half of 2015 begins.
Following its June 17 meeting, the Federal Reserve, as expected, voted to leave monetary policy unchanged. It characterized economic activity as expanding moderately following a basically flat first quarter. The central bank reiterated that it would require further improvement in the labor market and evidence that inflation would be moving toward its 2% objective before any tightening process would commence. With that being said, many Fed officials, including Chair Yellen, have given statements since the meeting indicating that conditions could be in place that would allow for a rate increase or even two before the end of the year.
While the Fed’s primary focus is clearly the domestic economy, it is mindful of the impact policy decisions have on the worldwide economy. The turmoil in Greece is just the latest in a series of international situations that could impact the timing of potential rate increases. While Greece potentially leaving the euro is not in and of itself a major economic event, any contagion to other members of the Eurozone would be quite worrisome to the Fed.
Although the prospects of higher interest rates are better than they have been since 2008, there are numerous conditions that would have to be met for a tightening to occur. In this environment we intend to follow our long-held conservative credit philosophy while seeking to maintain appropriate levels of liquidity.
Investors interested in Dreyfus mutual funds should consider the investment objectives, risks, charges and expenses of the fund carefully before investing. To obtain a prospectus, or a summary prospectus if available, that contains this and other information about a Dreyfus fund, contact your financial representative or call 1-800-DREYFUS. Please read the prospectus carefully before investing.
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.