(Photo Credit: Reuters/Mike Stone)
***CAF Note: There are lots of reasons to wonder about the trajectory of the US equity markets, which are at all time highs. First, historical patterns say that gains in the summer are generally limited and the year of mid-term elections in a second Presidential term is often not strong. Second, we are long over due for a 10-20% correction – indeed one would be healthy for the market. Third, we have the Federal Reserve jawboning small caps and biotech now. However, if you look at the sounds of distress in the bond markets – Puerto Rico, Detroit, Argentina are the tip of the iceberg – where is an investor supposed to go? The sounds of distress may be getting louder as the SEC says that they will finally address the money market rules, which have been languishing for quite some time. Is this in response to the Fed’s announcement that they are going to finish the QE taper in October? Someone is concerned about the financial liquidity going forward and for every good reason. Dodd-Frank and new technology has shut down or pruned many of the market makers who provided fixed income liquidity during crunches. So this bit of regulatory fine print is well worth watching.***
By Sarah Lynch and Eric Beech
The U.S. Securities and Exchange Commission announced late Wednesday it will meet July 23 to vote on final rules aimed at reducing investor risk in money market mutual funds.
The SEC did not disclose details on how the rule will look. Reuters previously reported the agency is leaning toward adopting two measures that will require prime funds to switch from a stable $1 per share net asset value to a floating NAV, and also permit fund boards to impose gates or fees on redemptions.
