MONEY MARKET | April 2021

Taxable Money Market

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John Tobin

John Tobin

Chief Investment Officer,
Money Market Strategies and Distribution

Economic activity continues to accelerate as re-openings expand and the effects of stimulus measures take hold. Nonfarm payrolls rose by a better than expected 916,000 in March and the unemployment rate ticked down to 6.0%, a far cry from the 14.8% peak hit in April of last year.

The wide availability of effective vaccines in the U.S. has allowed for significant rollbacks of enforced limits on gatherings and opening hours. Increased optimism on both the consumer and business front has been clearly seen in purchasing manager data as well as home and auto sales. Even the extremely hard hit travel and leisure sectors are showing major signs of recovery, although still well below a return to normal.

At its March meeting, the Federal Reserve (the “Fed”) reiterated its commitment to maintaining the current accommodative monetary policy for the foreseeable future. While acknowledging the substantial progress the economy has made, they also cite the longer-term effects of the pandemic on certain sectors and on more broadly based unemployment numbers.

While the Fed may be in no hurry, the markets will be quick to react to incoming economic data as the recovery strengthens. Inflation is expected to rise as supply shortages and production bottlenecks develop. The Fed has suggested such price increases will be transitory, but the rise in longer term interest rates may suggest otherwise. The uneven recovery throughout the rest of the world is also a potential negative.

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.

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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.

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