The agreements between the counterparties determine the rate. As there is not a huge market, swings will occur with supply and demand, especially when MMF holders actively trade large sums in and out between the municipal MMF and a taxable MMF trying to chase yields. The FFR participates only as an influencer as it benchmarks competitive offerings to VRDOs.The regular fluctuations in VCTXX are very apparent looking at the "Vg Charts" tab of the spreadsheet.Because all municipal MMFs mostly hold VRDOs, Variable Rate Demand Obligations. These have a wider fluctuation during interest rate change cycles, which we are still in.
Possibly naive question, but what determines the "interest rate change cycle"? The cycles in the VCTXX SEC yield don't seem to correspond to the dates of FOMC meetings as far as I can tell, for example.
You can back up to page 7 for some more insight:
viewtopic.php?p=7663464#p7663464
The link to the SIFMA Municipal Swap Index:
https://www.sifma.org/resources/general ... wap-index/
There are also plenty of posts on this site about the SIFMA index you can search for. Feel free to ask if more questions.
Statistics: Posted by Hacksawdave — Sun Dec 15, 2024 10:53 am — Replies 580 — Views 198190