€STR falls to record low, leaves CP on edge

By Frank Jackman
01 Oct 2020

The Euro Short Term Rate (€STR) hit a record low on Wednesday as the latest round of TLTRO funding raised liquidity in the banking system. If €STR is to settle at this new low, it could impact commercial paper funds as investors withdraw in search of higher yields.

“People aren’t immune to these negative rates,” said one rates analyst. “We are seeing traditionally risk averse investors, like corporate treasuries, move further along the risk curve. Investors who have money parked in money market funds trading in CP are withdrawing in search of higher yields.”

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