Money Fund Yields Inch Up to 5.14%
Money fund yields inched higher over the past week, after breaking the 5.0% level for the first time since August 2007 three weeks ago. The Crane 100 Money Fund Index (7-Day Yield) rose by 1 basis point to 5.14% in the week ended Friday, 8/11, after increasing by 9 bps the previous week. We expect yields to inch higher in coming days as they finish digesting the Fed's July 26th 25 basis point hike. Yields are up from 4.94% on June 30, 4.61% on March 31 and 4.05% on 12/31/22. Three-quarters of money market fund assets now yield 5.0% or higher and a third fund hit the 5.5% level on Friday. (They should get more company in coming days.) Assets of money market funds rose by $22.7 billion last week to $5.934 trillion according to Crane Data's Money Fund Intelligence Daily, and they have risen by $53.1 billion in the month of August (after rising $34.7 billion in July). Weighted average maturities were unchanged last week, and were mostly unchanged in July (at 24 days), after increasing by 3 days during June. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 681), shows a 7-day yield of 5.03%, up 1 bp in the week through Friday. Prime Inst MFs were up 1 bp at 5.24% in the latest week. Government Inst MFs were up 2 bps at 5.10%. Treasury Inst MFs up 1 bps for the week at 5.07%. Treasury Retail MFs currently yield 4.85%, Government Retail MFs yield 4.80%, and Prime Retail MFs yield 5.05%, Tax-exempt MF 7-day yields were down 50 bps to 2.71%. According to Monday's Money Fund Intelligence Daily, with data as of Friday (8/11), 108 money funds (out of 810 total) yield under 3.0% with $80.5 billion in assets, or 1.4%; 25 funds yield between 3.00% and 3.99% ($43.4 billion, or 0.7%), 244 funds yield between 4.0% and 4.99% ($1.304 trillion, or 22.0%) and 433 funds now yield 5.0% or more ($4.506 trillion, or 75.9%). Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was up 1 bp at 0.62% after rising 2 bps the week prior to last. The latest Brokerage Sweep Intelligence, with data as of Aug 11, shows that there was one change over the past week, RW Baird raised its rates to 2.09% for all balances between $1K and $999K, to 3.23% for balances between $1M and $1.9M, and to 4.17% for all balances of $5M or greater. Three of the 11 major brokerages tracked by our BSI still offer rates of 0.01% for balances of $100K (and lower tiers). These include: E*Trade, Merrill Lynch and Morgan Stanley.
