Money Market Fund Crunch

Investors are begining to flock away from low yielding money market funds as the U.S. debt ceiling impasse lingers on, reducing short-term liquidity.  Over the past two weeks investors have pulled out more than $62 billion from such funds echoing moves leading up to Lehman’s collapse where investors withdrew nearly $200 billion.  The loss of short-term liquidity may also act as a de-facto tightening for the U.S. economy, which has already begun showing signs of loosing steam moving into the second half.