(Bloomberg) -- Money-market funds are already scooping up the Treasury’s growing bill issuance now that the government has suspended the debt ceiling until 2025 and the Federal Reserve is nearing the end of its rate-hiking cycle, according to Invesco’s Laurie Brignac.

“Now that we’ve gotten past the debt-ceiling crisis, Treasury has a lot of bills to issue and actually we are already starting to take them down in the money market funds,” the chief investment officer and head of global liquidity said on Bloomberg Television. “We have been waiting with bated breath for the supply to come and it’s coming and we’re taking advantage of it.” 

Until recently, investors had been apprehensive about allocating their record amount of assets too far out the curve in the event they would either be holding securities at risk of a government default or be unable to immediately take advantage of central bank rate hikes. 

All of the uncertainty and lack of bill supply had pushed money-market funds to stash more than $2 trillion at the Fed’s overnight reverse repurchase agreement facility for over a year. No longer. Following President Joe Biden signing legislation suspending the ceiling at the beginning of the month, Treasury will have issued roughly $159 billion of debt maturing in one year or less by mid-June. 

On Tuesday, some 105 counterparties parked $2.07 trillion at the so-called RRP from $2.13 trillion the prior session, a $52 billion drop. Excluding month-end activity, that’s the largest decline since May 25. 

Brignac said these changes in the front—end environment are why funds are starting to extend the weighted average maturity of their assets, or WAMs. 

“Money funds have just been holding onto that cash in the reverse repo facility,” she said. “We’re expecting the Fed to actually hold tomorrow but we’re basically at the end so it’s time to start extending.” 

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