The Investment Company Institute published its latest weekly "Money Market Fund Assets" report Wednesday (a day early due to the Independence Day Holiday), which shows money market mutual fund assets jumping over $50 billion to a record $6.154 trillion. Assets have risen in 10 of the last 11 weeks, increasing by $185.5 billion (or 3.1%) since April 24. MMF assets are up by $267 billion, or 5.6%, year-to-date in 2024 (through 7/2/24), with Institutional MMFs up $84 billion, or 2.7% and Retail MMFs up $184 billion, or 10.9%. Over the past 52 weeks, money funds have risen by $679 billion, or 12.4%, with Retail MMFs up by $457 billion (24.6%) and Inst MMFs rising by $223 billion (6.4%). (Crane Data's separate Money Fund Intelligence Daily series shows money fund assets rising by $61.7 billion in July, through 7/2, to a record $6.551 trillion.)

The weekly release says, "Total money market fund assets increased by $51.23 billion to $6.15 trillion for the six-day period ended Tuesday, July 2, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $44.47 billion and prime funds increased by $4.51 billion. Tax-exempt money market funds increased by $2.25 billion." ICI's stats show Institutional MMFs jumping $31.5 billion and Retail MMFs rising $19.7 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.975 trillion (80.8% of all money funds), while Total Prime MMFs were $1.048 trillion (17.0%). Tax Exempt MMFs totaled $131.3 billion (2.1%).

ICI explains, "Assets of retail money market funds increased by $19.70 billion to $2.47 trillion. Among retail funds, government money market fund assets increased by $13.34 billion to $1.58 trillion, prime money market fund assets increased by $4.65 billion to $778.40 billion, and tax-exempt fund assets increased by $1.70 billion to $119.23 billion." Retail assets account for over a third of total assets, or 40.2%, and Government Retail assets make up 63.7% of all Retail MMFs.

They add, "Assets of institutional money market funds increased by $31.53 billion to $3.68 trillion. Among institutional funds, government money market fund assets increased by $31.12 billion to $3.40 trillion, prime money market fund assets decreased by $148 million to $269.34 billion, and tax-exempt fund assets increased by $549 million to $12.09 billion." Institutional assets accounted for 59.8% of all MMF assets, with Government Institutional assets making up 92.4% of all institutional MMF totals.

According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have risen by $61.7 billion in July (through 7/2) to a record $6.551 trillion. The previous record was $6.538 trillion on 4/2, which our asset series broke above on Monday and again on Tuesday. Assets rose by $15.7 billion in June and $91.4 billion in May, but they fell $15.8 billion in April and $68.8 billion in March. They rose $72.1 billion in February, $93.9 billion in January, $32.7 billion in December and $226.4 billion in November. MMF totals fell by $31.9 billion in October. They rose $93.9 billion in September, $98.3 billion in August and $34.7 billion in July. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're over $400 billion lower than Crane's asset series.

In other news, Federated Hermes' Debbie Cunningham writes "Much to celebrate, much to discuss". Subtitled, "A gathering of professionals acknowledged five decades of money funds and sifted through issues in their future," she tells us, "If cash is king -- and we certainly think so -- it held court last month in Pittsburgh. The annual Crane Data Money Fund Symposium took place in the conference center attached to our global headquarters, and what a court it was. More than 600 portfolio managers, salespeople and clients came to celebrate the industry's remarkable growth in assets over its more than five decades of existence and to discuss salient issues in the industry. Topics included the broad health of the liquidity space, the effects that could result from potential Federal Reserve policy decisions, the reinstatement of the debt ceiling in January and, of course, the implementation of the last of the new SEC money market fund rules."

Cunningham continues, "This was not a rah-rah gathering. The panels took a hard look at these and other issues. One topic related to the 'reforms' was the impact they are having on prime institutional money funds. As was expected, they have led to many firms either consolidating their prime institutional funds (as we have done), closing them (only a few) or reconfiguring them as government products (the most common decision). We obviously think the category has worth due to its potential to offer higher yields and for its potential to appeal to investors when rates fall, as was the case after the implementation of the 2016 rules."

She comments, "About that. The timing of the first Federal Reserve rate cut of this cycle is more uncertain than ever. Factors include the range-bound nature of inflation data, mixed bag of economic reports and, of course, the election. By a slight margin, we anticipate two cuts to come in the fourth quarter, meaning after the election. The Federal Open Market Committee's projection for just one cut by year-end might be suspect as it appears members cast their 'dots' before the softer Consumer Price Index data was released.... In any case, the Fed seems biased to ease at a slow pace. That benefits the liquidity industry as it allows time for the front end of the Treasury yield curve to anticipate what will come next."

Finally, the Federal Reserve Board released its "Minutes of the Federal Open Market Committee, June 11–12, 2024." They state, "The manager turned next to policy rate expectations. The path of the federal funds rate implied by futures prices shifted a bit lower over the intermeeting period and indicated one and one-half 25 basis point cuts by year-end.... The manager then turned to money markets and Desk operations. Unsecured overnight rates were stable over the intermeeting period. In secured funding markets, repurchase agreement (repo) rates remained steady for most of the period but firmed close to the end of May because of month-end pressures and the effect of large settlements of Treasury coupon securities. Rate firmness around reporting and settlement dates was consistent with historical patterns."

The Minutes say, "Use of the overnight reverse repurchase agreement (ON RRP) facility remained sensitive to market rates and the availability of alternative investments. Usage was little changed over much of the period but dipped late in the period, coincident with the month-end firming in private repo rates. The staff projected ON RRP usage to decline in coming months, as net Treasury bill issuance was expected to turn positive and private repo rates were expected to continue to move higher relative to administered rates amid large issuance of Treasury coupon securities. The staff also projected that reserves will not change much in the near term, with the exception of quarter-end dates, and then will decline about in line with the shrinking of the Federal Reserve's portfolio after ON RRP balances are nearly fully drained. The uncertainty surrounding both projections, however, was considerable."

They also tell us, "Conditions in U.S. short-term funding markets remained stable over the intermeeting period. Average usage of the ON RRP facility was little changed, primarily reflecting the portfolio decisions of money market funds amid lower net Treasury bill supply. Banks' total deposit levels were roughly unchanged over the intermeeting period, as outflows of core deposits were about offset by inflows of large time deposits."

The Minutes add, "In support of the Committee's goals to achieve maximum employment and inflation at the rate of 2 percent over the longer run, members agreed to maintain the target range for the federal funds rate at 5¼ to 5½ percent. Members concurred that, in considering any adjustments to the target range for the federal funds rate, they would carefully assess incoming data, the evolving outlook, and the balance of risks. Members agreed that they did not expect that it would be appropriate to reduce the target range until they have gained greater confidence that inflation is moving sustainably toward 2 percent. In addition, members agreed to continue to reduce the Federal Reserve's holdings of Treasury securities and agency debt and agency mortgage-backed securities. All members affirmed their strong commitment to returning inflation to the Committee’s 2 percent objective."

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