For more than a decade, the U.S. liquidity landscape has been dominated by low short-term interest rates, enacted to stimulate the economy at the height of the 2008 financial crisis. Throughout 2020, unprecedented pressures weighed on the markets for prime money-market funds (MMFs) and other popular vehicles for stashing corporate cash. At the height of the Covid-19 crisis in March of last year, this environment resulted in short-term rates for some U.S. dollar (USD)–denominated securities turning negative.

During that period, demand overwhelmed supply at the very short end of the Treasury/repurchase market, as concerns about credit risk surged. Between mid-March and the end of April 2020, over $1 trillion moved into government and Treasury MMFs. This abrupt increase in demand sent Treasury bill and overnight Treasury repurchase agreement (repo) rates temporarily below zero at times.