Short-Term Fixed Income: Business in the front, party in the back

Research evidence excerpt

Short-Term Fixed Income: Business in the front, party in the back

Pankaj Vohra AC (1-212) 834 5292 Global Markets Strategy J P M O R G A Npankaj.x.vohra@jpmchase.com

J.P. Morgan Securities LLC 31 July 2026

Molly Herckis (1-212) 622-0899

molly.herckis@jpmchase.com

J.P. Morgan Securities LLC

Short-Term Fixed Income

Business in the front, party in the back

• The FOMC kept policy rates unchanged, as expected, with three dissents in favor of a

hike. The more notable development came in the press conference, which focused on

the Fed’s approach to inflation and the effectiveness of monetary policy

• With our economists now penciling in a 25bp hike in December, we have raised our

year-end SOFR forecast to 3.90%

• Repo conditions firmed slightly over the past week, reflecting the exit of GSE cash

alongside roughly $110bn in T-bill settlements. Funding also tightened on 7/31, but

there were no material month-end pressures

• We expect repo to remain firmer on average through August, amid additional net T-bill

supply. Seasonal inflows should lift MMF AUMs higher, but flows remain below trend.

If MMF growth lags further, repo rates could face modest upward pressure, reinforcing

our preference to stay short the August SOFR/FF basis (SERFFQ6)

• MMF allocations retained a defensive tone in June, with WAMs declining across prime

and government funds as holdings data points to a preference for repo and floating-rate

exposure

• With bill issuance picking up so far this month and the seasonal ramp likely to continue

over the coming weeks, MMF T-bill allocations should increase, as they have tended to

track changes in T-bill outstandings closely

• If ABCP supply continues to expand, prime MMFs could absorb incremental issuance