...ECB QE Maintains Pressure on Euro MMFs: The European Central Bank's quantitative easing programme could turn euro MMF yields negative from current average yields of 0.1bp, should euro short-term yields fall further or remain very low for a prolonged period. Assets in constant net asset value (CNAV) euro funds were nevertheless stable in 4Q14, and even grew by 22% over 2014 as low risk, liquid alternatives are limited and MMFs yields are on average 17bp above 7-day LIBID. Investors' reactions to negative yields, if passed to them through MMFs, are unknown. A sudden, sharp acceleration in redemptions that put pressure on portfolio liquidity could be negative for ratings, if material and sustained. Weekly asset flows were more volatile for euro funds compared to other currencies. Yields Rise in Sterling and US Dollars: Yields of MMFs denominated in sterling and US dollars ticked up towards the end of the year, reaching on average 38bp and 6bp respectively. This is modestly above their benchmark's...
