SIM Money Market comment - Jun 12 - Fund Manager Comment12 Sep 2012
Market review
During the quarter, the Monetary Policy Committee (MPC) kept the repo rate unchanged at 5.50%. This was in line with market expectations. Inflation, at 5.7%, is below the upper band of the Reserve Bank's target range. Risks to inflation remain evenly balanced and inflation is expected to remain within the target range for the rest of the year. The money market curve flattened during the quarter, with the three-month rate increasing from 5.60% to 5.605%, while the twelve-month rate decreased from 6.285% to 5.950%. During the last month, the appreciation of the currency, better than expected inflation and expectations of an interest rate cut by market participants, contributed to the flattening of the money market curve. Treasury bills in the 91-day area of the curve traded above the bank rates, and credit spreads on short-term corporate credit decreased during the quarter. The current forward rates suggest that the repo rate will remain unchanged for an extended period.
What SIM did
Assets were invested in maturities across the money market yield curve during the quarter. Quality corporate credit, which traded above the three-month money market rates, was added to the portfolio. We also included floating rate notes in the portfolio. The combination of corporate credit and floating rate notes will enhance portfolio returns.
SIM strategy
Our preferred investments would be floating rate notes and quality corporate credit to enhance portfolio returns. We expect the repo rate to remain unchanged at the next MPC meeting.
SIM Money Market comment - Mar 12 - Fund Manager Comment14 May 2012
During the quarter, the Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 5.5%, which was in line with market expectations. At 6.1%, inflation is still above the upper band of the Reserve Bank's target range. Risks to inflation remain evenly balanced and inflation is expected to remain above the upper band of the target range until the second half of the year.
The money market curve steepened slightly during the quarter, with the three-month money market rate virtually unchanged at 5.6% versus 5.595% at the end of the previous quarter, while the 12-month rate increased from 6.115% to 6.285%. Treasury bills in the 91-day area of the curve traded below the bank rates, and credit spreads on short-term corporate credit decreased during the quarter.
The current forward rates suggest that the repo rate will remain unchanged for an extended period.
What SIM did
We invested in all maturities across the money market yield curve during the quarter. We added quality corporate credit, which traded above the three-month money market rates, and floating rate notes to the portfolio. The combination of corporate credit and floating rate notes will enhance portfolio returns.
SIM strategy
Our preferred investments would be in floating rate notes and quality corporate credit to enhance portfolio returns. We expect the repo rate to remain unchanged at the next MPC meeting.
SIM Money Market comment - Dec 11 - Fund Manager Comment22 Feb 2012
Market review
During the quarter, the Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 5.5%. This was in line with market expectations. At 6.1%, inflation breached the upper band of the Reserve Bank's target range in November. Risks to inflation are still evenly balanced and inflation is expected to remain above the upper band of the target range for an extended period.
The money market curve steepened during the quarter, with the three-month money market rate increasing from 5.575% to 5.595% and the twelve-month rate increasing from 5.865% to 6.115%. Treasury bills in the 91-day area of the curve traded below the bank rates, and credit spreads on short-term corporate credit decreased during the quarter.
What SIM did
Assets were invested in all maturities across the money market yield curve during the quarter. Quality corporate credit, which traded above the three-month money market rates, was added to the portfolio. We also included floating rate notes in the portfolio to enhance portfolio returns.
SIM strategy
Our preferred investments would be floating rate notes and quality corporate credit to enhance portfolio returns. We expect the repo rate to remain unchanged at the next MPC meeting.