Treasury investors are used to dealing with an inverted yield curve, but on deposits? At today’s overly liquid banks, the more you deposit, the lower your return may be. It could even be explicitly negative. The retail rates banks offer consumers top wholesale rates, which has some large cash investors buying consumer products. “It’s a remarkable time for the cash industry,” observes Eric Lansky, director of StoneCastle Cash Management, a New York-based registered investment adviser.

Corporate cash now totals more than $6 trillion, notes Mike Gallanis, a partner at Treasury Strategies, which tracks cash. “The levels are unprecedented.”

With the oversupply devaluing cash, some of the best rates for highly liquid deposits covered by the Federal Deposit Insurance Corp.—40 to 70 basis points, with an average of 57 basis points, according to bankrate.com—are paid by regional and community banks to holders of money market accounts, Lansky reports. Treasury investors can search for these banks and place $250,000 per tax ID, or they can use products like CDARS (Certificate of Deposit Account Registry Service) or FICA (Federally Insured Cash Account) that break up large deposits and distribute them to banks in pieces small enough to keep full FDIC insurance, says Lansky, who sells the FICA product.

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