Liquidity Fund Monthly


Investor sentiment was generally positive in July amid healthy economic data, strong corporate profitability and dovish signals from major central banks. However, the surge in cases of the Delta variant of coronavirus that could further delay a “return to normal” tempered risk appetite, as did a clampdown by Chinese regulators in a number of sectors

Inflation surprised on the upside, but key central banks continued to stress its transitory nature with bond markets pricing a return to “slow and low” inflation rates in developed markets. Government bond yields tracked lower in many countries during the month even as economic recovery was maintained – although United States GDP growth of 6.5% in Q2 was lower than expectations. Money market rates generally ticked lower over the course of the month.

EUR Liquidity LVNAV Fund

European Central Bank: No change in policy rates in July, with the ECB also saying inflation could run faster than its 2% target without triggering a policy response.

Market Rates: Three-month EURIBOR averaged -0.55% in July, one basis point lower on the prior month. *

Macro: Eurozone headline inflation rose to 2.2% in July from 1.9% in June, although the core rate fell to 0.7% from 0.9%.

ECB Deposit Facility Rate: -0.50%
1-month Fund Yield (Gross): -0.56%
1-month Fund Yield (Net): -0.71%**

GBP Liquidity LVNAV Fund

Bank of England: Policy rates were unchanged in the absence of a Monetary Policy Committee meeting in July.

Market Rates: The LIBOR curve dipped slightly in July, with the three-month rate down 1bp to 0.07% over the month.*

Macro: Headline annual inflation surprised to the upside, jumping to a near-three-year-high of 2.5% in June.

Bank Base Rate: 0.10%
1-month Fund Yield (Gross): 0.08%
1-month Fund Yield (Net): 0.00%**

USD Liquidity LVNAV Fund

Federal Reserve: Policy rates and bond purchases were unchanged, though the Fed flagged ‘tapering’ may be nearing.

Market Rates: US cash rates were generally stable in July, with three-month LIBOR moving lower to 0.12% from 0.15%.*

Macro: US headline inflation exceeded expectations once more, coming in at 5.4% in June from 5.0% in May, with the core rate rising to 4.5% year-on-year.

Fed Fund Target Rate: 0.00% - 0.25%
1-month Fund Yield (Gross): 0.15%
1-month Fund Yield (Net): 0.00**

USD Treasury Liquidity Fund

Federal Reserve: While policy was unchanged, the Fed acknowledged the economy has made progress towards its goals.

Market Rates: Short-dated rates were steady, with the one-month Treasury bill yield ending July unchanged at 0.05%.

Macro: Core Personal Consumption Expenditures (PCE) – the Fed’s favoured annual inflation measure – rose 0.4% month-on-month in June, taking the annual rate to 3.5%.

Fed Fund Target Rate: 0.00% - 0.25%
1-month Fund Yield (Gross): 0.04%
1-month Fund Yield (Net): 0.01%**