Barring a significant deterioration in economic prospects, the first Fed
increase in almost a decade is likely to occur before year-end. This shift in monetary policy had been anticipated for some time, but until recently had failed to translate into higher money market yields. The market is now on the move: 3M Libor is increasing; some high quality 6 month commercial paper is issuing close to 0.50% and the yield for the 1 year Average Life tranche of Auto ABS deals is near 1.00%. Even 1yr Treasury Bills have broken to the upside (0.36%) despite heightened structural demand for Treasuries. Arguably these are still low, but the highest we have seen in years.