Money Market
The market for short-term, highly liquid debt used to park or borrow cash.
Quick answer
The money market trades short-term, highly liquid debt and sets short-term interest rates.
Definition
The money market is where short-term, highly liquid debt such as Treasury bills and bank deposits are traded. It is where institutions park cash overnight and where short-term interest rates are set. Its rates feed directly into the currency and bond markets.
How It Works
- Treasury bills and deposits trade there
- It sets overnight and short rates
- Its rates feed the currency market
Trading Tips
1
Watch money market rates for rate expectations
2
Read short rates as the cost of holding cash
3
Use them to gauge central bank policy lean
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