Money market investors are emerging as drivers of the latest global financial drama, roiling credit markets and hurting corporate borrowers by shunning commercial paper and piling into short-term US government debt. Yields on short-term Treasury bills last week made their biggest two-day fall since October 1987, as spooked commercial paper investors shifted to the most liquid short-term assets, boosting assets in money market funds to a record $2,700bn. The shift leaves many US companies facing sharply higher costs on the short-term debt used to fund daily operations, the FT says in a separate report, and some could be forced to reduce their exposure to the $200bn corporate commercial paper market.
