Spurred by new Federal Reserve projections in December that forecast 75 basis-points of rate cuts in 2024, the financial markets increased their projections to as many as six. The difference is still meaningful, and it remains to be seen which call will be realized. The debate did not halt the steady updraft in the liquidity market in December, and the MMDT Cash Pool daily net yield rose to 5.66% on January 1, 2024.
Current Cash Pool 7-day net yield
Your Representatives
Federated Hermes
Participant Services
Wayne.Perry@FederatedHermes.com
1-888-965-MMDT (6638)
Wayne is responsible for managing the MMDT Participant Services team from the High Street office.
Wayne Perry
Federated Hermes
Associate Sales Representative
Caroline.Kafafian@FederatedHermes.com
724-809-1250
Caroline is responsible for relationship management with MMDT participants.
Caroline Kafafian, CIMA
For more information on how you can seek to take advantage of a rising-rate environment and invest in the MMDT Cash Portfolio, call 617-335-0770.
MMDT Cash Pool's yield moves to 4.76%
Federated Hermes
Senior Vice President
Senior Sales Representative
Brian.Willer@FederatedHermes.com
617-335-0770
Brian is responsible for relationship management with MMDT participants.
Brian R. Willer, CIMA
MMDT Cash Pool yields rose amid rate debate
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MMDT is the state sponsored investment pool offered by the Commonwealth of Massachusetts to its public entities
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,CFA
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Deborah Cunnigham, CFA
January 1, 2024
In her annual outlook, Federated Hermes’ CIO for Global Liquidity Markets Deborah Cunningham lays out three topics she expects to dominate cash management in 2024.
What to watch in 2024
ARTICLE
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The potential benefits of extending ‘duration.’
The MMDT Short Term Bond Pool offers investors access to a diversified portfolio of fixed-income securities investing in government, investment-grade corporate, mortgage-backed and asset-backed securities that mature in the 1- to 5-year range. The portfolio emphasizes total return, the combination of a bond’s price movement and the interest collected.
The Pool is managed by John Gentry, who draws upon more than 30 years of experience to guide the team’s selection of bonds. He continually modifies the portfolio’s composition of bonds with varying maturities to modify its duration. This is a measure of a portfolio’s sensitivity to interest-rate movement: the longer its duration, the more likely it will benefit from a decrease in interest rates, which we believe could happen in 2024. After raising them 12 times over the past 19 months, the Federal Reserve is likely poised to begin lowering rates in 2024. Positioning the Pool’s portfolio with a longer duration has the potential to enhance total return due to the combination of a boost in price and an increase in income from the addition of new bonds.
For public sector entities looking to optimize their investing options, the MMDT Short Term Bond Pool offers a historical record of competitive yield and total return. Our disciplined, diversified process is designed to seek outperformance through duration, yield curve positioning, sector allocation and individual security selection. The experienced team of portfolio managers and credit research analysts adjust these levers at different points in the market cycle in seeking increased performance.
More than 72% of the portfolio’s holdings are AAA rated or U.S. Treasuries. But as with all investing, it is possible to experience price volatility and lose principal. Although participants have access to their capital within one day of exiting the portfolio, it is most suitable for assets that can be committed for a minimum of 18-24 months. This potentially makes the Pool an ideal option for OPEB or trust fund assets, as well as operating capital not needed imminently. The portfolio employs a disciplined investment process designed to accommodate the rigorous risk management demanded by the public sector. It has a competitive fee structure with no minimum investment requirement.