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Treasuries Market Gets Squeezed

Demand for government-only funds is expected to go through the roof before new money fund rules take effect in October. Here's expected impact on Treasuries.

By Liz Capo McCormick, Bloomberg | Updated on August 01, 2016

The U.S. government’s attempt to alleviate the short supply of T-bills is about to get a little harder.

After years in the making, a post-crisis rule to prevent a run on the money-market industry will finally take effect this October. It will force funds that oversee about $600 billion to abandon a fixed $1-a-share price and float their net asset value (NAV). But because businesses and state governments treat the funds like bank accounts, the prospect of prices falling below a buck is causing a big shift into money-market funds that buy only government debt.

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