Money Fund Yields Inch Lower to 5.10%
While yields on money market mutual funds won't drop in earnest until after the Federal Reserve cuts short-term interest rates, yields continue to creep lower ahead of any move. Money fund yields fell to 5.10% (down 1 bp) on average in the week ended Aug. 23 (as measured by our Crane 100 Money Fund Index, an average of 7-day yields for the 100 largest taxable money funds) after remaining unchanged the week prior. Yields were 5.13% on 7/31 and 6/28, 5.14% on 5/31, 5.13% on 4/30, 5.14% on 3/31 and 2/29/24, 5.17% on 1/31/24, 5.20% on 12/31/23, 4.94% on 6/30/23, 4.61% on 3/31/23 and 4.05% on 12/31/22. The vast majority of money market fund assets now yield 5.0% or higher. Assets of money market funds rose by $17.7 billion last week to $6.577 trillion according to Crane Data's Money Fund Intelligence Daily. Weighted average maturities were unchanged at 33 days. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 699), shows a 7-day yield of 5.00%, down 1 bp in the week through Friday. Brokerage sweep rates also remained unchanged, contrary to the discussions on a number of brokerage earnings calls in recent weeks. Prime Inst money fund yields were unchanged at 5.15% in the latest week. Government Inst MFs were down 1 bp at 5.09%. Treasury Inst MFs were down 1 bp at 5.04%. Treasury Retail MFs currently yield 4.82%, Government Retail MFs yield 4.81%, and Prime Retail MFs yield 5.01%, Tax-exempt MF 7-day yields were down 12 bps to 3.08%. According to Monday's Money Fund Intelligence Daily, with data as of Friday (8/23), 37 money funds (out of 819 total) yield under 3.0% with $16.5 billion in assets, or 0.3%; 87 funds yield between 3.00% and 3.99% ($119.3 billion, or 1.8%), 270 funds yield between 4.0% and 4.99% ($1.238 trillion, or 18.8%) and 425 funds now yield 5.0% or more ($5.203 trillion, or 79.1%). Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was unchanged (again) at 0.62%. The latest Brokerage Sweep Intelligence, with data as of Aug. 23, shows that there was no changes over the past week. (We haven't seen many of the changes mentioned on earnings calls, which apparently only apply to a narrow slice of "advisory" accounts. Only a couple of brokerages report these rates, which aren't included on our BSI report.) Thirteen weeks ago, we removed the rates for TD Ameritrade from the listings, which completed its merger with Charles Schwab and which pushed the averages higher (2 bps). Three of the 10 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.
