Also pressuring the market are expectations that funding conditions in China's short-term money market will get tighter toward the end of the year, when demand for cash typically surges for gift purchases and bonus payment, analysts said.
Broadly speaking, short-term Treasuries can be expected to have more in common with money market rates than long-term Treasuries, but deciding which short-term Treasuries match up best with money market rates can be a tricky thing.
It was just as wrong to invest money for your short term goals into the stock market during the bull run of the 1990s as it is to put long term money into CDs today.
In addition, regulators have unveiled all sorts of programs to backstop the short-term lending markets, money market funds, bank deposits and bank debt.
For savers, this means regular bank deposits, money-market funds and short-term Treasurys effectively lose them money each year.
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Banks will also have access to short-term money to deal with "exceptional market stresses".
These include the stockmarket, the bond market (government and corporate) and the money market for short-term securities, such as commercial paper.
To prevent yield chasing, most stable value funds prohibit transfers to similar options, such as a money market or short-term bond fund.
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Investors cannot afford to watch their wealth wither away in low returning money market funds and short-term bonds.
Others will make bigger adjustments, putting some assets needed for short-term expenses in safe investments like money-market accounts while leaving assets for long-term expenses in riskier investments like stocks.
College-savings professionals recommend money-market and short-term-bond funds.
Money market funds invest in short-term fixed-income securities or commercial paper from governments, financial institutions and corporations.
In most 401(k) plans, to move money from a stable-value account into a money-market fund or short-term bond fund, plan participants have to be invested in a riskier option for at least 90 days.
U.S. money-market funds that provide short-term credit to European banks will suffer major losses (about one third of their bank loans are in Europe.) And the operations of big U.S. companies that hold European bonds, or rely on short-term credit, will screech to a halt.
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Money market funds and cash equivalents (short-term certificates of deposit, T-bills) will yield below 1.0 percent for several more years, thereby generating a negative real return.
French banks have suffered from a bout of risk aversion from U.S. money market funds, a prime source of short-term dollar funding.
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Trouble is, they're still diving for cover in the even safer short-term Treasury market, accepting negligible interest rates to keep their money safe and beyond the reach of inflation.
One is that money market rates have farther to fall, following short-term Treasury rates down.
American money-market funds, a big source of short-term funding for European banks, are already said to be trimming their exposures to French banks.
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Ms. McCLANAHAN: Well, the safest thing, especially for short-term money, is to put into CDs - and I would just use short-term CDs right now interest rates being so low - you could use money market funds, money market mutual funds.
After all, our huge long-term corporate losses stem not from easy money or mark-to-market rules but largely from the incorrect short-term incentives that compensation plans give to key executives.
Money market funds may also invest in municipal bonds backed by state governments, short-term notes issued by corporations, or CDs.
Under this rule, if short-term market rates went up, deposits would be withdrawn from banks and thrifts and put in the money market.
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