Short Term Investments and Market Insights

Top takeaways from the April meeting:

• Liquidity markets are weathering the tariff storm. The repo markets continue to function well, despite a somewhat wider range in overnight levels. The week-over-week changes in yields further out the liquidity curve don’t necessarily reflect the whole story of the day-to-day volatility and uncertainty, increasing the relative attractiveness of overnight to 3-month paper.
• Municipals are heading into a period that has produced very attractive after-tax returns historically. While this is specifically the case for money market securities, now that the municipal yield curve is upward sloping, there are opportunities throughout the short duration municipal landscape. 
• In the government ultrashort space, liquidity remains good for CMOs (collateralized mortgage obligations). Fixed-rate mortgages cheapened like other risks assets following tariff announcements. While there are daily fluctuations in bid/ask levels, CMO floaters are still actively trading which speaks to the health of the market and the general attractiveness of the space right now.  

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Investors should carefully consider the fund’s investment objectives, risks, charges and expenses before investing. To obtain a summary prospectus or prospectus containing this and other information, contact us or view the prospectus provided on FederatedHermes.com/us. Please carefully read the summary prospectus or prospectus before investing.
Views are as of April 2025 and are subject to change based on market conditions and other factors. These views should not be construed as a recommendation for any specifi c security or sector.
Variable and floating rate loans and securities generally are less sensitive to interest rate changes but may decline in value if their interest rates do not rise as much or as quickly as interest rates in general. Conversely, variable and floating rate loans and securities generally will not increase in value as much as fixed-rate debt instruments if interest rates decline.
Yields quoted are for illustrative purposes only and not representative of all securities or any specifi c investment.
Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.
Diversification does not assure a profit nor protect against loss.
Past performance is no guarantee of future results.
Yield curve is a graph showing the comparative yields of securities in a particular class according to maturity. Securities on the long end of the yield curve have longer maturities.
Bond credit ratings measure the risk that a security will default. Credit ratings of A or better are considered to be high credit quality; credit ratings of B are good credit quality and the lowest category of investment grade; credit ratings of B and below are lower-rated securities; and credit ratings of C or below have high default risk.
Ultra-short and microshort bond funds are not “money market” mutual funds. Some money market mutual funds attempt to maintain a stable net asset value through compliance with relevant Securities and Exchange Commission (S E C ) rules. Ultra-short and microshort funds are not governed by those rules, and their shares will fluctuate in value.
The value of some mortgage-backed securities may be particularly sensitive to changes in prevailing interest rates, and although the securities are generally supported by some form of government or private insurance, there is no assurance that private guarantors or insurers will meet their obligations.
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G85035-33 (4/25)
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