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Risk assets rallied while bond prices fell during the period as improving economic data and the prospect of tax reform in the United States boosted sentiment. While geopolitical tensions flared on the Korean Peninsula, market-based measures of volatility remained exceptionally low for the majority of the quarter. As widely anticipated, the Federal Reserve announced policy changes designed to begin reducing the size of its balance sheet at the September meeting, but also surprised some market participants, with a majority of the Committee forecasting a third rate hike this year.
The Portfolio provided a return of 0.22% in the third quarter. Money market rates and credit spreads were largely range-bound throughout the period. In acknowledgement of the significant technical pressures in the market for short duration government securities, we selectively added duration to take advantage of steepness in the money market yield curve and remain neutral to our peer group.
In the money markets, concerns over the debt ceiling abated in the wake of a Congressional agreement that will shift the issue well into 2018, buying time to reach a longer-term solution.
An investment in the Money Market Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Although the Funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Funds.
Please carefully read the summary prospectus or prospectus and consider the investment objectives, risks, charges and expenses of Northern Institutional Funds before investing. Call 800-637-1380 to obtain a summary prospectus or prospectus, which contains this and other information about the Funds.
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