Regulation and interest rates reshape short-term financing, huge $7.5 trillion transformation is imminent

U.S. money market funds holding more than $7.5 trillion of assets face major asset allocation adjustments as investors expect regulation and interest rates to change. Fed policy changes may reduce yields on Treasury bills and commercial paper, prompting fund managers to explore alternative investments such as bank deposits and short-term bonds. Regulatory scrutiny from the U.S. Securities and Exchange Commission (SEC) has also driven portfolio risk management adjustments. This shift could impact short-term debt demand, credit pricing and corporate financing, while competition from high-yield savings products accelerates this trend.