Morgan Stanley Investment Management told clients its money-market funds aren’t holding Treasuries that mature in the next month as Congress debates whether to raise the U.S. debt ceiling.
The firm’s money-market portfolios don’t own Treasuries that mature starting tomorrow through Nov. 20, the Morgan Stanley unit said in its Investor Insights publication for this month. The prime portfolios have no Treasury exposure, it said.
“Our portfolio management team has taken a conservative stance on U.S. Treasury bills and notes in anticipation of congressional gridlock around raising the debt ceiling,” the firm wrote. “We felt it prudent to avoid the potential price volatility near the estimated deadline as well as eliminate any possible need to sell those securities later at potentially less favorable prices.”
JPMorgan Chase & Co., the second-biggest provider of U.S. money-market mutual funds, said last week that those products had divested Treasuries that mature between Oct. 16 and Nov. 6. Fidelity Investments, the Boston-based company that is the largest U.S. money-fund manager, also said it had moved out of Treasuries maturing in late October and early November.
Rates on bills due Oct. 31 jumped to the highest level since the securities were issued in May. The rate increased 20 basis points, or 0.20 percentage point, to 0.51 percent, according to Bloomberg Bond Trader prices. The securities traded at a rate of zero as recently as last month.
BlackRock, the world’s largest asset manager, also announced last week that its money funds are free of the debt most likely to be affected by a default. New York-based Citigroup Inc., the third-biggest U.S. bank, said today that it doesn’t own Treasury securities that mature this month and holds few with terms ending before Nov. 16.