Question: What's driving the recent significant inflows into liquidity products?
Deborah Cunningham: Well, I think initially, the flows began because of Silicon Valley Bank's collapse, and the concern over whether people's deposits were safe. What I think was then determined by those that continued to own deposits at that point, was that deposits were very lagging from an interest rate perspective. So, money market funds are known as some of the safest vehicles for liquidity products in the marketplace. They offer a lot of diversification, they offer current yield on a daily basis at par, and that's something that deposit products are not offering at this point. Current yields in money market funds are four to 5%, which represent where money market yields themselves are, compared to many deposit products in the marketplace that at the time of Silicon Valley Bank's collapse, were probably south of 1%. So, I think it has a lot to do with what was initially concern for safety, from a deposit perspective for investors in the marketplace, but then turned into something more like realization that there was a better product out there that was providing a better return.
Question: Are there signs of lingering stress in the banking sector?
Deborah Cunningham: I would say not in the banking sector itself, but definitely with individual banks. For instance, Silicon Valley Bank, when it released its earnings, also showed a very large drop in deposit, and that was very quantified in that earnings information. Now, contrast that to other small and large regionals, in addition to the large money center banks, many of which had increases in deposits, and all of which looked much better from an asset liability match standpoint, as well as diversification across their sectors. So, I think to some degree, it amplified that Silicon Valley Bank itself was, to some degree, a bit of an anomaly compared to the much larger banking sector in the US, which in fact, is at one of its healthiest phases right now in the last 20 years. The capital quality, the level of asset quality within the banks, the asset liability matching process, all of those things are working in favor of almost all of the banks at this point. So, the stress itself in the banking sector has largely been removed.