Short-Term Fixed Income: No straight line

Taxable MMF AUMs have risen by $72bn (1%) MTD, possibly reflecting seasonal inflows. Year to date, AUMs are up $313bn (4%) and briefly touched an all-time high of $8.3tn. Net T-bill supply is expected to increase by $190bn over the remainder of November, before seasonal paydowns of $156bn in December, leaving net supply up $34bn from now through year-end. Demand should keep pace with near-term supply, particularly if money funds continue to benefit from seasonal inflows into year-end. Funding continued to firm in the first half of the week, with SOFR and TGCR at IORB +7bp and IORB +5bp on 11/3, though levels have since eased. The lingering effects of Canadian year-end, along with continued T-bill settlements and a higher share of DVP volumes, likely contributed to the recent firmer funding levels. We suspect SOFR may continue to carry a slight firm bias over the next two weeks, though it should begin trending lower, possibly back towards IORB +2bp on average in the second half of the m