MONEY MARKET | February 2021

Taxable Money Market
Commentary

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Patricia Larkin

Chief Investment Officer,
BNY Mellon CIS

January’s employment report was a disappointment as the rolling effects of the pandemic continue to play out. Nonfarm payrolls increased by only 49,000 and the prior two months were revised downward by 159,000 jobs. Especially worrisome was the minute increase in private payrolls of only 6,000 positions. These statistics indicate the fragile and uneven trajectory of the recovery.

The Commerce Department reported that GDP growth for the final quarter of 2020 came in at an annualized rate of 4.0%, which was welcome news, but down dramatically from the 3rd quarter, which due to statistical quirks, showed a 33.4% jump as the economy reopened following the near shutdown in the spring.

At its January meeting, the Federal Reserve’s (the “Fed”) Open Market Committee cautioned that economic growth had moderated, as had the jobs market, as new restrictions were enacted in various regions of the country. Chairman Jerome Powell reiterated that the Fed would continue to ensure that financial conditions remained accommodative while urging further fiscal stimulus on the part of the Congress and the new Administration.

The outlook for such stimulus is not clear at the moment. Despite the Democrats controlling both chambers, the ability to force legislation through is extremely limited, especially in the Senate. While it is quite likely that further stimulus will eventually be approved, the scope and timing will depend on the Byzantine mechanics of Beltway politics.

The heroic development and approval of vaccines in record time shows that the virus can be contained. While the rollout of the vaccination implementation has been haphazard at best, those logistical issues will eventually be sorted out. We believe this will encourage people to feel comfortable in going about their day to day routines. That, in turn, will allow much of the economy to bounce back and permit policymakers to focus their attention on specific areas that may bear the scars of the pandemic for some time to come.

All investments involve risk, including the possible loss of principal. Certain investments involve greater or unique risks that should be considered along with the objectives, fees, and expenses before investing.

BNY Mellon Investment Management is one of the world’s leading investment organizations and one of the top U.S. wealth managers encompassing BNY Mellon’s affiliated investment management firms, wealth management organizations and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the corporation as a whole or its various subsidiaries generally.

Views expressed are those of the author(s) and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change.

This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular investment, strategy, investment manager or account arrangement. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Please consult a legal, tax or financial professional in order to determine whether an investment product or service is appropriate for a particular situation. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. BNY Mellon Investment Adviser, Inc. and BNY Mellon Securities Corporation are companies of BNY Mellon. Dreyfus Cash Investment Strategies (Dreyfus CIS) is a division of BNY Mellon Investment Adviser, Inc. © 2021 BNY Mellon Securities Corporation, distributor, 240 Greenwich Street, 9th Floor, New York, NY 10286.

MARK-170699-2021-02-09