all news  /  timeline  /

2020 in review - an extraordinary year in money markets

By Csongor Mathe on 2020-12-21

2020 has been an extraordinary year by any measure, both in our personal lives and in markets.

The money markets have experienced their most tumultuous year since at least 2008 - the drastic changes in interest rates, the credit environment and the market and regulatory perception of some of the structures and products that have been integral to the fabric of this ecosystem for decades will undoubtedly have wide-ranging consequences in the coming months and years. We have had a front-row seat to the remarkable twists and turns that have unfolded over the last 12 months and have done our best to capture the most important events, opinions and reflections of the year in this interactive timeline.

19.02.2020

The S&P 500 closes at a record high of 3386.15

More information

28.02.2020

Stock markets report largest single week declines since 2008 Financial Crisis

More information

09.03.2020

Yields on all US T-Bill maturities fall below 1%, with the 10-year Treasury yielding just 0.709%

More information

“Across my entire professional career, I've never seen anything like this. This interest-rate structure is unprecedented. It suggests central banks will not be able to deal with the current crisis, and all of this unnerves me.“

Dr. Kaufman - Former Chief Economist and Senior Partner at Salomon Brothers
11.03.2020

Bank of England cuts base rate by 50 bps to 0.25%

More information

15.03.2020

The Fed cuts its benchmark interest rate to near zero and says it would buy $700 billion in Treasury and mortgage-backed securities

More information

“As monetary easing continues, credit quality will worsen in the private sector, and U.S. government borrowing will further rise with the annual budget deficit likely to surpass $1 trillion in the coming years. I fear this scale of deficit will likely become the norm. This is not a healthy combination for the economy and future growth.“

Dr. Kaufman - Former Chief Economist and Senior Partner at Salomon Brothers
17.03.2020

The US Federal Reserve Board announces the Commercial Paper Funding Facility to purchase corporate paper

More information

“It’s a big deal. The CP market is essentially frozen.”

Mark Cabana - Interest Rate Strategist at Bank of America
17.03.2020

The Bank of England announces the Covid Corporate Financing Facility

More information

17.03.2020

According to a research note from Citi, 80% of investment-grade corporate ETFs trade at all-time high discounts, with the gap between closing price and vehicle's net asset value for Vanguard’s $55bn fixed income ETF surging to a 6.2% discount

More information

18.03.2020

The European Central Bank announces the €750 billion Pandemic Emergency Purchase Programme

More information

19.03.2020

Bank of England further cuts base rate by 15 bps to 0.10%

More information

19.03.2020

The CARES Act, a $2.2 trillion economic stimulus bill by the US government, is passed in Congress

More information

19.03.2020

The US Treasury Department announces the Money Market Mutual Fund Liquidity Facility to provide $10 billion credit protection to money market funds

More information

20.03.2020

High grade bond fund outflows hit record $35.6 billion after an outflow of $7.3 billion in the previous week

More information

“We look across the globe and it is hard to find yield. Assuming a reasonable economic backdrop we think there could be more interest in lower quality triple Cs.”

Brian Robertson - High-Yield Portfolio Manager at Pacific Asset Management
20.03.2020

The UK government announces the Job Retention Scheme

More information

20.03.2020

BNY Mellon steps in to support one of its money market funds (Dreyfus Cash Management) amid sharp outflows from parts of the sector, buying $1.2 billion of the fund’s assets so it has cash to help cover redemptions

More information

21.03.2020

Moody's revises its global money market funds outlook to negative from stable, owing to unprecedented market volatility and economic uncertainty amid the coronavirus pandemic

More information

21.03.2020

Heavy investor withdrawals (exceeding $8B) prompt Goldman Sachs to inject more than $1 billion into two of its prime money-market portfolios

More information

24.03.2020

The Bank of England launches Contingent Term Repo Facility

More information

“(...) the Bank activated its Contingent Term Repo Facility (CTRF) on 24 March, committing to lend unlimited amounts of sterling at close to Bank Rate, against a broad range of collateral. These operations, together with the passing of the March quarter end, brought repo rates back to more normal levels.“

Andrew Hauser - Executive Director for Markets at BoE
26.03.2020

A record 3.3 million Americans file for unemployment benefits as the coronavirus slams economy

More information

27.03.2020

Moody’s issues a downgrade alert for most of the European banking system, warning of a slump in profits and a surge in bad debts despite emergency measures across the Eurozone

More information

“Banks provide financial oxygen to the economy. Not even the ECB’s big bazooka can work properly if banks cease to function or fail on a massive scale. Yet this is precisely the risk the euro area faces, if a real economy in freefall – as it will be for the foreseeable future – results in a surge of credit defaults and massive losses on market exposures.“

Ignazio Angeloni - former Member of the ECB's Supervisory Board
02.04.2020

The UK government announces the Coronavirus Business Interruption Loan Scheme (CBILS) to support SMEs and the Coronavirus Large Business Interruption Loan Scheme (CLBILS) to support larger businesses

More information

03.04.2020

Fitch Ratings revises its sector outlook for US prime money market funds (MMFs) to Negative from Stable, reflecting heightened redemptions and reduced liquidity in short-term markets

More information

“We expect an additional round of regulatory reform. (...) sensitivity around that liquidity threshold has made runs on money funds more likely.”

Greg Fayvilevich - Senior Director at Fitch Ratings
07.04.2020

Bank of America warns that the total amount of debt falling to junk status for the year could reach $200 billion

More information

12.04.2020

Investment-grade bond funds see outflows of $15.134 billion, while junk bond funds post inflows of $214 million last week

More information

14.04.2020

Cash levels held by fund managers across the globe stand at their highest levels since the 9/11 terrorist attacks in 2001, having risen from 5.1% to 5.9%

More information

20.04.2020

The price of crude oil falls below zero and subsequently closes at –$38, the lowest price for oil in the 138-year history of the New York Mercantile Exchange

More information

04.05.2020

Central banks overall inject close to $100 billion to prop up investment funds hit by the coronavirus-induced market turmoil, raising fresh questions about the systemic risks posed by the asset management industry

More information

04.05.2020

Fitch Ratings estimates that central banks around the world have provided facilities in excess of $90 billion to support mutual funds amid the coronavirus pandemic

More information

“Redemption suspensions and the implementation of support facilities during the pandemic suggest that regulation has yet to fully address the liquidity risk that may materialise amid severe stress. This is despite increased regulatory attention to liquidity in recent years.“

Fitch Ratings
15.05.2020

Zoom is now worth more than the 7 biggest airlines

More information

21.05.2020

Northern Trust decides to liquidate one of its prime money market funds that invests in commercial paper after sharp outflows in March

More information

“If you think of a company that has ongoing expenses, and right now they may not be bringing in normal revenue, expect them to draw on their MMF shares and deposits. They’ll need to take some of that cash and spend it.”

Alex Roever - Head of US Rates & Short Duration Strategy at J.P. Morgan Securities
02.06.2020

CQS reportedly sells European CLOs at 80% discount in market turmoil

More information

04.06.2020

The ECB announces that the envelope for the pandemic emergency purchase programme (PEPP) will be increased by €600 billion to a total of €1,350 billion

More information

04.06.2020

Andrew Hauser, Executive Director of Markets at the Bank of England, discusses the need for a potential money market fund reform

More information

“...we must, in time, ask ourselves hard questions about the financial markets we rely upon, and their potential to amplify the sort of ‘dash for cash’ we saw in March and April. (...) - Third, how do we deal with the risks posed to financial stability by the structural tendency for Money Market and some other open-ended funds to be prone to runs, without having to commit scarce public money to costly support facilities?“

Andrew Hauser - Executive Director of Markets at the Bank of England
18.06.2020

Banks rush to borrow a record €1.3tn from the European Central Bank at deeply negative interest rates

More information

23.06.2020

Fidelity Investments decides to liquidate two more money market funds with $14 billion in cash assets as a precaution in the low-rate, higher volatility market

More information

“Parts of the financial market became dysfunctional in March when the pandemic lockdown began. Money market funds across the world saw big outflows during a "dash for cash" that could have become worse had central banks not stepped in to buy bonds to ease the strain. We haven't forgotten that and we are working with other central banks and with market regulators around the world, because it was a global issue, to fully understand what happened and to try and put reforms together to try and stop it from happening again.“

Alex Brazier - Executive Director for Financial Stability Strategy and Risk at the BoE
15.07.2020

Randal K. Quarles, Chairman of the Financial Stability Board, highlights the vulnerabilities of the non-banking financial institution (NBFI) sector

More information

“The corporate sector entered the crisis with high levels of debt and necessarily borrowed more to navigate the crisis, raising solvency concerns for some borrowers. (...) The impact of the COVID Event on credit markets has highlighted vulnerabilities in the NBFI sector related to liquidity mismatches, leverage and interconnectedness, and investor behavior related to certain funds that they may treat as cash equivalents during economic calm but not during crisis.“

Randal K. Quarles - Chairman of Financial Stability Board
29.07.2020

S&P Global reaches 1,190 downgrades so far this year, just 136 short of the record 1,326 set in 2009 during the Global Financial Crisis

More information

12.08.2020

The combined total of $139 billion in loan-loss provisions by the 15 largest US and 32 largest European banks is the highest since the $186 billion reached in the second half of 2009

More information

“If I go through my last eight years, we had a lot of mini-earthquakes, but never of the magnitude of what we are seeing now. This is a crisis that is driven by fear in a different way . . . this time it’s not just about people losing their assets or savings, it’s about their life, it’s about their families. It’s so profound, so different.”

Sergio Ermotti - UBS CEO
18.08.2020

The S&P 500 index closes at a record high of 3389.78 amid the ongoing COVID-19 pandemic in the United States

More information

18.08.2020

Money market fund rates approach record low levels

More information

03.09.2020

Vanguard converts the largest prime money market fund in the world, with its $125.3 billion AUM, into a government fund

More information

“Vanguard investors prioritize capital preservation for their money market investments, and we believe that the rewards of even the most conservatively managed prime funds are no longer worth the risk.“

Greg Davis - Chief Investment Officer at Vanguard
24.09.2020

Fitch announces that the number of global corporate defaults in the first eight months of 2020 has reached 42, likely to surpass the record of 56 in 2009

More information

“It’s a fool’s game trying to predict the ultimate credit losses from the crisis.”

Jaime R. Martin - Fund Manager at Aviva Investors
25.09.2020

JPMorgan is the latest Wall Street bank to slash its forecast for US economic growth

More information

“Markets revenues could halve in the rest of the year.“

Jaimie Dimon - CEO of JP Morgan
29.09.2020

Vanguard liquidates and dissolves municipal money market funds

More information

“Due to the short supply of certain types of municipal securities available in Pennsylvania and New Jersey, we believe these specific municipal money markets no longer offer the market depth needed to prudently provide these state-specific products in all market conditions”

Vanguard
29.09.2020

The Fed says rules to make money market mutual funds less susceptible to runs likely need to be improved after a bout of turmoil in March that prompted the Federal Reserve to intervene

More information

“There’s no doubt that we need to re-examine the MMF reforms of the last time“

Jay Clayton - SEC Chairman
01.10.2020

The Bank of England announces that it had reached its target of at least 20 billion pounds ($25.73 billion) of corporate bond purchases, and would not buy any more until it gives further notice

More information

22.10.2020

According to a McKinsey survey conducted in August, 55% of European SMEs (France, Germany, UK, Spain and Italy) are expected to shut down by September next year if their revenues remained at current levels

More information

“Approximately 4 out of 5 SMEs in Europe think the economy is weak“

Mckinsey Report 10/2020
23.10.2020

Regulators discuss reforms for prime money market funds more intensely

More information

“Why expose the firm to liquidity risks, credit risks, regulatory risks, and perhaps more importantly, reputational risks when other similar alternatives are available that bear less risks and potentially could offer higher fees/​earnings?“

Alex Roever - Head of US Rates & Short Duration Strategy at JPM Securities, Teresa Ho - Executive Director at JPM US Fixed Income Strategy, Ryan Lessing - Associate at JPMUS Fixed Income Strategy
29.10.2020

US investment-grade corporate bond volume registers a record $912 billion through September 30, up 77 percent over the same time frame one-year prior, according to a new Fitch Ratings report

More information

05.11.2020

Rory Callagy, Vice-President at Moody's, discusses Moody's expectations of money market fund reforms

More information

“Our expectation is that we'll see more regulation in the money fund space. (...)  And that's likely to cause additional players to exit the market, so that will lead to a more consolidated industry as (...) some may make the decision that the investment to comply with the new regulations is not worth the return.“

Rory Callagy - VP Senior Credit Officer at Moody's
05.11.2020

The UK government extends Furlough to March and increases self-employed support

More information

10.11.2020

Hedge fund manager Bill Ackman says that companies will struggle to pay their debts, just eight months after he cashed in a $2.6bn profit from a similar trade at the start of the pandemic

More information

“I hope we lose money on this next hedge. We’re in a treacherous time generally and what’s fascinating is the same bet we put on eight months ago is available on the same terms as if there had never been a fire and on the probability that the world is going to be fine.”

Bill Ackman - Founder and CEO of Pershing Square Capital Management
11.11.2020

Short sellers betting against European and U.S. travel, leisure and bank stocks lose billions of dollars, after news of a COVID-19 vaccine triggers a rally in shares of companies that have suffered under months of virus-fueled restrictions and lockdowns

More information

12.11.2020

Sir Jon Cunliffe from the Bank of England says COVID-19 market volatility to prompt global reforms to markets and funds

More information

“The arbitragers were exposed to the risk that, under stress and conditions of extreme volatility, the gap between the future and the cash market would increase, perhaps due to the cost of financing or margin, or due to an increase in the liquidity differential between the products. During March this risk crystallised. There were substantial selling flows in cash US Treasury markets, as the ‘flight to safety’ became the ‘dash for cash’.“

Sir Jon Cunliffe - Deputy Governor for Financial Stability at the Bank of England
17.11.2020

Bank regulator Carolyn Rogers calls for dividends to remain on hold

More information

“We are all in this suspended reality. As government support programmes expire some businesses and households are going to fare better than others, there will be losses and the scale is unclear at this stage. There is a long way to go.”

Carolyn Rogers - Secretary-General of the Basel committee
26.11.2020

Portugal’s 10-year bond yield falls below zero for the first time, having yielded more than 14% in 2012

More information

“There’s no point trying to fight this move. The market assumes this debt will disappear into the ECB’s coffers for a long time to come.”

Ludovic Colin - Fund Manager at Vontobel Asset Management
10.12.2020

The European Central Bank increases its €1.35 trillion emergency bond-buying programme by €500 billion and extends it into March 2022

More information

10.12.2020

The Bank of England’s Prudential Regulation Authority gives lenders the green light to resume dividend payments, nine months after it asked them to suspend shareholder payouts and preserve capital at the height of the coronavirus pandemic

More information

11.12.2020

Following their IPOs, DoorDash closes 85% higher in its trading debut, while Airbnb jumps 112% during its first day as a public company

More information

15.12.2020

Northern Trust announces that they will exit the prime and municipal money market fund sector, by liquidating their municipal money market funds in February 2021 and merging their Northern Funds Money Market Fund into the Northern Funds-U.S. Government Money Market Fund

More information

“Our view is that the constraints limiting municipal and prime money market mutual funds today will not improve significantly over time. The money market mutual fund landscape has fundamentally changed.“

Peter Yi - Asset Management's Director of Short-Duration Fixed Income and Head of Taxable Credit Research at Northern Trust