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A press release entitled, "S&P Capital IQ Adds Intra-Day Pricing on Munis to its Roster of Pricing Products and Services" tells us, "S&P Capital IQ, a leading provider of financial research, data, analytics and securities pricing, announced the availability, starting today, of a new intra-day municipal bond pricing service designed to assist regulatory and industry efforts aimed at bringing about greater transparency to that market. Provided by Standard & Poor's Securities Evaluations Inc., a business unit of S&P Capital IQ specializing in multi asset class mark to market solutions, the new service will enable users to track pricing on over 3 million bonds throughout the trading day. This new service has been designed to support portfolio managers, advisors and back offices looking to develop solutions that address recent Securities & Exchange Commission (SEC) rules requiring institutional money market funds to calculate floating Net Asset Values. Under the existing model for end of day 4:00PM evaluations, floating NAV funds may no longer have the ability to offer same day settlement. The Commission's new rule encourages investment companies to generate multiple NAVs throughout the day, which aims to provide shareholders with intraday liquidity at prevailing market prices." "The intra-day pricing of money market funds seeks to better facilitate same day settlement of money market transactions," said Greg Carlin, Vice President, S&P Capital IQ. "In addition, we believe that the availability of intra-day pricing across all asset classes will improve pre-trade price transparency, best execution, compliance oversight, and trade processing. As important, because many day-to-day events have proven to have material impacts on the fixed income markets in recent times, we are finding that investors are seeking an intra-day 'compass' to be assured that their assumptions are intact."

ICI's latest "Money Market Mutual Fund Assets" report shows that assets were up sharply in the past week, even with quarter-end occuring on Tuesday. The report says, "Total money market fund assets increased by $12.95 billion to $2.61 trillion for the week ended Wednesday, July 1, the Investment Company Institute reported today. Among taxable money market funds, Treasury funds (including agency and repo) increased by $12.66 billion and prime funds decreased by $60 million. Tax-exempt money market funds increased by $360 million. Assets of retail money market funds decreased by $1.73 billion to $864.68 billion. Among retail funds, Treasury money market fund assets decreased by $1.14 billion to $191.46 billion, prime money market fund assets decreased by $60 million to $496.14 billion, and tax-exempt fund assets decreased by $540 million to $177.08 billion. Assets of institutional money market funds increased by $14.69 billion to $1.75 trillion. Among institutional funds, Treasury money market fund assets increased by $13.80 billion to $781.31 billion, prime money market fund assets were unchanged at $901.77 billion, and tax-exempt fund assets increased by $890 million to $66.76 billion." Month-to-date (since May 27) assets are flat, or up just $1 billion. MMF assets have gained each of the past three weeks, but year-to-date assets are down $118 billion or 4.3%.

Fund lineup tweaks, mergers and liquidations continue, as JP Morgan abandoned its "B" share classes and Federated prepares to liquidate a Euro MMF. JP Morgan filed with the SEC to convert its B shares in three funds -- JP Morgan Prime Money Market Fund, JP Morgan Liquid Assets Money Market Fund, and JP Morgan US Treasury Plus Money Market Fund -- into other share classes. The Prospectus Supplement SEC filing for J.P. Morgan Trust I and II says, "Accelerated Conversion of Class B Shares to Morgan Shares. The Board of Trustees of the J.P. Morgan Funds has approved the automatic conversion of the Funds' Class B Shares into Morgan Shares on or about June 19, 2015 (the “Conversion Date”), notwithstanding the conversion schedule set forth in each prospectus that indicates a later date. On the Conversion Date, all Class B Shares of the Funds will automatically convert to Morgan Shares of the same Fund. No contingent deferred sales charges will be assessed in connection with this automatic conversion. This automatic conversion is not expected to be a taxable event for federal income tax purposes or to result in the recognition of gain or loss by converting shareholders, although shareholders should consult their own tax advisors. As of the Conversion Date, all references to Class B Shares of the Funds in the Prospectus, Summary Prospectuses and Statement of Additional Information are hereby deleted." Also, a release entitled, "Fitch Withdraws Federated Short-Term Euro Prime Fund's 'AAAmmf' Rating," explains, "Fitch Ratings has withdrawn the Federated Short-Term Euro Prime Fund's 'AAAmmf' rating. The fund is managed by Federated Investors (UK) LLP. Fitch is withdrawing the rating as the fund will close (subject to FCA approval), liquidate all holdings and return the proceeds to investors. Accordingly, Fitch will no longer provide ratings or analytical coverage for the entity." In other news, Fed Governor Lael Brainard gave a speech on "Recent Changes in the Resilience of Market Liquidity." It says, "Recent events and commentary raise concerns about a possible deterioration in liquidity at times of market stress, particularly in fixed income markets."

The WSJ's CFO Journal writes "Corporate Impact From Greece Looks Tame, So Far". It says, "Months of warnings about debt defaults in Greece and Puerto Rico have allowed the vehicles where corporate finance chiefs store their cash time to shelter themselves from the immediate impact of crises in those regions. For example, cash isn't flowing out of money-market funds, which hold billions of corporate cash, according to Peter Crane, president of Crane Data, which tracks the industry. "It's relatively calm," he said. He noted that assets in money funds rose $1.9 billion on Friday to $2.522 trillion, suggesting that few corporate treasurers were pulling money out in advance of this weekend's talks. There's very little reason for them to. Money funds don't invest in low rated debt such as Greek or Puerto Rican bonds, he said. As money flows into high-quality assets such as U.S. Treasurys, money funds invested in those securities could see more inflows. Anthony Carfang, a partner at Treasury Strategies Inc., said that new banking regulatory rules could aid the funds. He explained that international bank rules are forcing banks to hold more in U.S. Treasurys, which could reduce the number of the bonds in circulation, as more investors seek the bonds as safe havens. Money funds, which are large holders of U.S. government bonds could therefore find it lucrative to lend out their holdings of bonds for investors who need the securities for the short term."

The Investment Company Institute released its latest monthly "Trends in Mutual Fund Investing," which confirms that May was the first positive month in 2015 for money market funds. Money market funds rose to $2.603 trillion in May from $2.565 trillion at the end of April, a jump of $38 billion of 1.5%. MMF assets dropped by $80.0 billion in April, $32.9 billion in March, $13.9 billion in February, and $33.4 billion in January. The report says, "The combined assets of the nation's mutual funds increased by $120.95 billion, or 0.7 percent, to $16.30 trillion in May, according to the Investment Company Institute's official survey of the mutual fund industry. Bond funds had an inflow of $5.47 billion in May, compared with an inflow of $6.77 billion in April.... Money market funds had an inflow of $36.17 billion in May, compared with an outflow of $81.50 billion in April. In May funds offered primarily to institutions had an inflow of $34.10 billion and funds offered primarily to individuals had an inflow of $2.06 billion." The total number of money market funds stood at 521 (360 Taxable, 161 Tax-Exempt), down 2 from the previous month. MMFs represent 16.0% of all mutual fund assets, while bond funds represent 21.7%, according to ICI's statistics. In other news, Bloomberg writes, "Who Will Save the Repo Market? Barclays Has a Few Ideas." It says, "It's no secret that the vast and shadowy "repo market," where a wide variety of banks and investors pawn their assets in exchange for short-term loans, has had a tough time of it in recent years. It was ground zero for the financial crisis, and the size of the repo market has since fallen off a cliff, because of new rules that make the transactions more expensive for banks as well as the deep scars left by the 2008 crisis."

The Federal Reserve Bank of New York issued a "Statement to Revise the Time of Day of the Overnight Reverse Repurchase Agreement Operation for June 30, 2015" Friday, which says, "The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York (New York Fed) has been working internally and with market participants on operational aspects of tri-party reverse repurchase agreements (RRPs) to ensure that this tool will be ready to support the monetary policy objectives of the Federal Open Market Committee (FOMC). Regarding the overnight reverse repurchase agreement (ON RRP) operation to be conducted on Tuesday, June 30, 2015, the Desk will conduct the operation from 9:30 to 10:00 a.m. Eastern Time, several hours earlier than usual. All other terms of the exercise will remain the same. This change only applies to the ON RRP operation conducted on June 30, 2015. The ON RRP operation conducted on Monday, June 29, and those conducted on and after Wednesday, July 1, 2015, will be conducted at the usual time of 12:45 to 1:15 p.m. Any future changes to these operations will be announced with at least one business day's prior notice on the New York Fed's website. As an operational readiness exercise, this work is a matter of prudent advance planning by the Federal Reserve. These operations do not represent a change in the stance of monetary policy, and no inference should be drawn about the timing of any change in the stance of monetary policy in the future."

ICI's latest "Money Market Mutual Fund Assets" report says, "Total money market fund assets increased by $2.68 billion to $2.60 trillion for the week ended Wednesday, June 24, the Investment Company Institute reported today. Among taxable money market funds, Treasury funds (including agency and repo) increased by $3.81 billion and prime funds increased by $1.63 billion. Tax-exempt money market funds decreased by $2.76 billion.... Assets of retail money market funds decreased by $10 million to $866.41 billion. Among retail funds, Treasury money market fund assets increased by $830 million to $192.60 billion, prime money market fund assets increased by $900 million to $496.19 billion, and tax-exempt fund assets decreased by $1.74 billion to $177.62 billion. Assets of institutional money market funds increased by $2.69 billion to $1.74 trillion. Among institutional funds, Treasury money market fund assets increased by $2.98 billion to $767.52 billion, prime money market fund assets increased by $730 million to $901.78 billion, and tax-exempt fund assets decreased by $1.01 billion to $65.87 billion."

CNN Money writes, "Bubble Fears: Is it Time to Consider a Rainy Day Fund?." It says, "It's been mostly sunny on Wall Street for six years now as stocks have soared. But some investors are worried that the next rainy day could come soon. Stocks are pricey, we haven't had a correction in years, and America's central bank -- the Federal Reserve -- could shake things up in September. One place to weather the storm is a money market fund. It's considered one of the surest investments available, outside of stashing your cash in a bank account. Here's how it works: You put your cash into a fund, and the fund manager invests some of it in relatively safe bets: U.S. government bonds, corporate debt or municipal debt. The goal is to get people a better bang for their buck than just putting their money into a savings account, but keep the risk low -- far lower than investing in stocks or even most bond funds. "It often serves as a surrogate to a bank account," says Tim Huyck, Fidelity's chief investment officer of money markets. Most people invest in a money market fund for a few months, often to try to beat the interest you get on a bank account." It continues, "Money market funds, often called "money funds," could stand to win big from a Fed rate hike, which many believe will happen in September. "Money market funds become a nice alternative during these times," says Esther Chance, senior portfolio manager at Invesco, which manages $68 billion in money market funds. After a Fed rate hike, money market funds "definitely stand to win." A rate hike would do two things. First, it sometimes disrupts the momentum in the stock market, spooking investors to put money in safer assets. Second, it would bump up the interest that investors earn on their savings and bonds. Since the Fed put interest rates at near zero in 2008, money funds and bank accounts basically have given you the same return -- nothing. But historically, when rates are higher -- like they're expected to go this year -- money funds have higher returns than your average savings account." It continues, "Over $2.6 trillion is invested in money market funds in the United States. That's down from recent highs during the recession, but it's still almost 50% higher than 15 years ago, according to data from Morningstar and Investment Company Institute. The growth is impressive considering that over the same time span, there are half as many money market funds today as there were in 2000. Money funds have consolidated over the years into a few mega-powers players, like Fidelity and Vanguard. New rules that arrive in 2016 could change the game too."

A press release entitled, "Fitch: US Prime Money Funds Differing on Views of Fed Rate Hike," says, "US money fund managers have, on average, significantly reduced portfolio maturities in recent months, as the industry positions for rising rates and money fund reform; however, there is evidence of widely differing views within these broad trends, according to Fitch Ratings. Fitch sees some of the significant weighted average maturity (WAM) variations in part reflecting differing expectations on the timing of the Fed's first rate increase. An example of two large prime money fund managers with diverging WAMs can be seen in the chart here. The WAM of Morgan Stanley-managed prime funds has been trending materially lower since the beginning of 2015, dropping to a trough of 12 days seen at the beginning of June, from 31 days recorded in January. On the opposite end, JPMorgan-managed prime funds are trending in a much higher range, with WAM increasing to 53 days from 44 days over the same time period. Across all US prime money market funds, WAMs have declined to 37 days at the beginning of June 2015, from 48 days at the end of October 2014, according to iMoneyNet data. Adjusting maturities is a key strategy for money funds, as portfolios with shorter maturities will generally tend to outperform if the Fed raises rates faster than the market expects, while longer-positioned funds will likely outperform if the Fed moves slower than expected. However, we recognize that a range of factors including credit quality considerations, investor profiles and asset flows can also explain maturity positions. An additional important consideration for prime fund managers is the approaching effective date for the implementation of money fund reform. The Securities and Exchange Commission set October 2016 as the time when certain prime money funds will start floating their share prices and may be subject to redemption restrictions. The industry generally expects these provisions to cause large asset outflows from prime money funds to government funds in the months leading up to the reform implementation date. Therefore, many fund managers have begun building up liquidity positions to withstand redemptions. So far, however, outflows from prime funds have been muted. Institutional government fund assets have increased 9% since reform was enacted in July 2014, but institutional prime funds have also risen by 6%, according to data from Crane. Seasonal factors affect money fund flows, so it is hard to tell whether the data indicate a reform-related preference toward government funds, which will likely intensify closer to the reform implementation date. Anecdotally, Fitch is aware that a small number of institutional money fund clients have switched from prime to government funds in response to reform. The increased demand for government funds may bump against shortages in supply and, consequently, lead to wider spreads between government and prime funds."

A press release entitled, "Federated Investors Completes Transition of Assets into Federated Ohio Municipal Cash Trust," says, "Federated Investors, Inc., one of the nation's largest investment managers, completed the acquisition of certain assets of Touchstone Advisors, Inc. related to the reorganization of the Touchstone Ohio Tax-Free Money Market Fund into the Federated Ohio Municipal Cash Trust. Since the acquisition was announced in March, approximately $100 million in Ohio tax-free money market assets have been transitioned, either before or as part of the reorganization, to the Federated Ohio Municipal Cash Trust. With approximately $18 billion in tax-free money market assets under management as of March 31, 2015, Federated offers more tax-free state money market products than any other investment manager. "Federated is a leading provider of liquidity management services, and we regularly work with many different types of organizations as they evaluate their cash-management needs," said Joe Machi, director of alliances at Federated. "We will continue to consider and evaluate alliance and acquisition opportunities with asset managers, banks, insurers and broker/ dealers in the United States and around the world." Also, Reuters writes, "July Bills Rates Hold in Negative Territory." It says, "Interest rates on U.S. Treasury bills that mature in July held in negative territory on Monday as cash investors scrambled for low-risk vehicles to park their money as the end of the second quarter approaches <b:>`_next week. `Money market funds and other investors have shifted more cash into the U.S. Federal Reserve's reverse repurchase agreement (RRP) program, given the relative scarcity of ultra short-dated government debt, analysts said.... T-bill rates, depending on maturity, were at their most negative since the end of 2011, Tradeweb data showed." Finally, the New York Fed issued a "Statement Regarding Term Reverse Repurchase Agreements," announcing an updated schedule for Term Operations. It says, "For the June quarter-end, the Desk previously announced its plans to offer at least $200 billion in term reverse repurchase agreement transactions that cross the quarter-end, noting that the schedule would be updated on or around June 22." The updated schedule has operation/settlement dates of June 25 and June 29 with an RRP offering rate of +3 basis points. Both are for $100 billion.

Bloomberg posted an article on how the seasons impact fund flows called, "The Unseen Driver of Mutual Fund Inflows: What Time the Sun Sets." It says, "As seasons change, so do the habits of fund investors. When it's spring and the days get longer, risk appetites grow and cash flows to equities, according to a new study. As winter approaches, safer alternatives like the money market come into favor. Seasonal depression is to blame, the researchers said. A reduction in sunlight worsens people's moods. More is at work in the market than robots battling over earnings and valuation, according to the behavioral branch of analysis from which the study springs. The updated findings, from the paper "Seasonal Asset Allocation: Evidence from Mutual Fund Flows" to run in the Journal of Financial and Quantitative Analysis, surprised its own authors. "I initially thought that depressed people would throw all caution to the wind and do risky things just to get back into a decent frame of mind," Maurice Levi, the University of British Columbia professor who coauthored the report, said by phone. "But they actually tend to withdraw. It's enough to affect the markets." Results like these may interest the mutual fund industry, which spends more than $500 million a year on advertising, the authors said. More research may show that managers anticipating the patterns affect returns in stocks and bonds, they added." It continues, "The study examined monthly fund flows from 1985 to 2006. It concluded that seasons had a statistically significant influence on which asset classes got the most through the year. Levi, along with York University professor Mark Kamstra, University of Toronto associate professor Lisa Kramer and University of Maryland professor Russ Wermers, quantified monthly flows into five fund categories with varying risk profiles. Money market funds were treated as the safest and equities the riskiest. They found net flows into U.S. stocks were below average from September through December and highest from March to June. The opposite was true in money markets, which saw greater inflows in the autumn and subpar inflows for spring. The patterns reduce net flows to equity funds by about $13 billion as days shorten, the authors estimated. They boost flows to safer products by as much as $4 billion in September. "We find strong evidence that this seasonality is correlated with the timing of seasonal variation in risk aversion," the authors wrote. The consequences are "economically large, representing tens of billions of dollars," they said." Note: We're not sure about the reasons behind the flows, but money market funds have seen outflows during the first half of the year and inflows in the second half of the year for 4 years straight.

Bloomberg writes, "No Relief for Mom and Pop's Money Funds When Fed Tightens." It says, "Investors parking cash in the safest of U.S. assets probably won't see immediate relief from depressed returns when the Federal Reserve starts raising interest rates. The possibility of as many as two rate increases by year-end has failed to outweigh a mismatch between supply and demand for the shortest and safest of debt, with Treasury bill rates maturing through October locked at about zero percent. Global regulatory changes are boosting the need for high-quality assets from bills to repurchase agreements to bank deposits just as the supply is sliding." It adds, "Ahead of the first policy tightening since 2006, even more money may temporarily flow into the safest of government debt." Bloomberg quotes Northern Trust's Peter Yi, "Some core fixed-income investors are just concerned about rising rates. As they wait for the market to sell off in longer-maturity instruments, they may temporarily park themselves in cash and cash-like securities." The piece adds, "A mix of post-crisis regulations has boosted demand for repurchase agreements, where investors temporarily lend cash and take in securities as collateral, just as banks are backing away from the transactions as they have become costly as regulators push to shore up banks capital. A Fed reverse repo program, which the central bank has been testing since 2013 as one of several tools to manage its eventual removal of monetary accommodation, has provided some relief by giving investors a new place to park funds. Yet strategists say the market's current size, at $300 billion for overnight deals, won't suffice or alleviate downward pressure on rates." In other news, money fund assets were down for the second straight week (which included a quarterly tax payment date, June 15), according to ICI's latest weekly "Money Market Mutual Fund Assets." The release says, "Total money market fund assets decreased by $11.06 billion to $2.60 trillion for the week ended Wednesday, June 17, the Investment Company Institute reported today. Among taxable money market funds, Treasury funds (including agency and repo) decreased by $2.42 billion and prime funds decreased by $9.13 billion. Tax-exempt money market funds increased by $500 million. Assets of retail money market funds increased by $3.04 billion to $866.43 billion. Among retail funds, Treasury money market fund assets increased by $380 million to $191.77 billion, prime money market fund assets increased by $2.42 billion to $495.29 billion, and tax-exempt fund assets increased by $240 million to $179.36 billion. Assets of institutional money market funds decreased by $14.09 billion to $1.73 trillion. Among institutional funds, Treasury money market fund assets decreased by $2.81 billion to $764.54 billion, prime money market fund assets decreased by $11.55 billion to $901.05 billion, and tax-exempt fund assets increased by $260 million to $66.88 billion." Year-to-date, money market fund assets are down $134 billion or 4.9%.

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