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News Archives: November, 2006

A hike before a cut? In his latest speech Tuesday, Federal Reserve Chairman Ben Bernanke said, "FOMC reiterated its view that upside risks to inflation are the predominant risks to the forecast and indicated that it is prepared to take action to address inflation if developments warrant."

New Internet bank iGObanking.com, a division of Flushing Savings Bank, is offering a no minimum, 5.3% APY on its iGO Savings Account. The move comes after higher-profile online banks, notably ING Direct and HSBC Direct, have given up the costly top-yielding bank game.

The market's predictions for rates may be seen at the Chicago Board of Trade, which recently merged with the Chicago Mercantile Exchange. The CBOT offers futures contracts for 30 Day Federal Funds. As of 11/28, the odds of a 1/4-point cut are almost 50% for March 20-21 and 78% by the May 9 Fed meeting.

In a recent interview with St. Louis Fed's William Poole, Bloomberg writes "Futures Fail to Predict Interest Rate Changes". Former Brown University professor Poole says Eurodollar futures have been accurate less than 30% of the time.

Raymond James Bank is now the biggest bank in the Tampa area at $3.2 billion says an article in the St. Petersburg Times. Brokerage sweep assets of Raymond James Bank generate "about 170 basis points" vs. the Heritage money market funds which had generated about 45 basis points in profits.

Easier Finance reports that JPMorgan Asset Management (JPMAM) was "awarded Best Money Market Fund in the TMI 2006 Awards for Innovation and Excellence in Treasury & Risk Management." The judging was based on the opinions of corporate treasurers, according to JPM's Kathleen Hughes.

Crane Data and Money Fund Intelligence would like to wish all our visitors, subscribers, partners, and information suppliers a Happy Thanksgiving. We appreciate your support and referrals. Stay liquid and stay safe!

Money fund assets broke above $2.3 trillion this week according to the ICI. Assets ($2.311 trillion) are no up by $254 billion year-to-date, or 12.3%, as both individuals and institutions continue shovelling cash into money markets.

Vanguard has released another helpful guide for investors, "How to Find the Right Place for Your Cash". It discusses three criteria: "safety, accessibility, and yield" of money funds, passbook savings, bank money market accounts, and CDs.

Bloomberg's Chet Currier writes "Tricky Time to Choose Between Bonds, Money Funds". The piece points out the advantage money funds hold during an inverted yield curve and contrasts stability of income vs. stability of principal.

Today, we list the top-yielding tax-exempt money funds, ranked by 7-day yield (11/20): 1) Alpine Municipal MMF (3.66%); 2) Morgan Stanley Inst Liq T-E I (3.58%); 3) Evergreen Inst Muni MMF (3.56%); 4) Vanguard PA T-E MMF (3.54%) ; and, 5) Vanguard Tax Exempt MMF (3.54%).

Money market mutual fund assets jumped yet again, rising by almost $15 billion in the latest week, according to the Investment Company Institute's weekly survey. Money funds, which now total $2.288 trillion, are up by $231 billion, or 11.2%, year-to-date.

The Justice Department is "investigating anticompetitive practices in the municipal bond industry," says DOJ's Kathleen Blomquist. Bloomberg's "U.S. Subpoenas Muni Bond Firms, Seizes Papers in Criminal Probe" says the focus is on collusion in the municipal GIC (guaranteed investment contract) market.

Peter Crane predicts "Cash will be king again in 2007" in a BankRate.com piece. "I think 2007 will be a tipping point when it comes to investors caring about the rates they earn on their cash," says Crane.

Fitch Ratings has rated BNY Hamilton Money Fund AAA/V1+. The rating "reflects the fund's high credit quality, conservative investment policies, and strong ability to provide shareholders with a ... $1.00 per share."

As of Friday, Nov. 10, Putnam Prime Money Market Fund Institutional became the sole No. 1 money fund in America (ranked by 7-day yield). The top position has been extremely competitive in the current flat yield curve environment.

Lehman Brothers' Neuberger Berman has filed to launch 9 new money market funds, says Strategic Insight's FundFiling.com. The new Lehman Brothers Institutional Liquidity funds include: Money Market, Prime, Government, Govt Reserves, Treasury, Treasury Reserves, Tax Exempt, Municipal, and NY Municipal.

BlackRock's Larry Carolan, Crane Data's Peter Crane and TreasuryCurve's Paul Rice spoke on a panel hosted by PFPC's Christine Gill at the PFPC Leadership Summit in Boston on "Trends in Institutional Cash Mgmt" Thursday.

S&P has rated Commerce Capital Institutional Select Government Money Market Fund AAAm. The fund is expected to commence operations Nov. 29; the adviser is affiliated with Commerce Bank of Cherry Hill, NJ.

The November issue of Money Fund Intelligence is now available. Articles include a discussion of Volatility in Tax-Exempt Money Fund Indexes, Are ARS's Cash?, and a Profiles of Deutsche's DWS Money Market Series. MFI also includes monthly indexes, rankings, and money fund performance tables.

The ICI's Institutional Money Mkt Fund Committee Met Oct. 11 in NY. Topics included: client servicing, risks, and money fund data needs. See the new November Money Fund Intelligence for more details.

Read the Article on Crane Data in the Latest Financial Advisor Magazine Issue!. The FA November edition has a piece entitled "Data Entry", which features Crane Data.

The FDIC will charge 5- to 7- basis points in deposit insurance premiums for the first time in a decade, reports the Associated Press.

We're No. 2! Six money funds are tied for 2nd highest yield. The extremely flat and stable yield curve environment has brought about a rare jumbled pack. BGIXX, ICAXX, MPUXX, PPMXX, SSIXX, and VMRXX are all just one basis point behind the No. 1-ranked CUTXX.

SEC Looking at Possible Repo Market Manipulation Says WSJ.com The article "SEC Shines Light on Obscure Market", discusses tri-party repo and "possible manipulation of Treasury prices."