Money fund yields declined by 2 basis points to 4.64% on average during the week ended Friday, Nov. 1 (as measured by our Crane 100 Money Fund Index), after inching down 2 bps the week prior. They've declined by 42 bps since the Fed cut its Fed funds target rate by 50 bps percent on Sept. 18. Yields were 4.65% on 10/31, 4.75% on 9/30, 5.10% on 8/31, 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, and 5.20% on 12/31/23. Yields should remain flat to slightly lower until Friday, when they should decline sharply again if, as expected, the Fed's cuts rates by 1/4 percent at its Nov. 7 meeting. (Note: Register soon for our "basic training" conference, Money Fund University, which will take place Dec. 19-20 in Providence, R.I.)
The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 664), shows a 7-day yield of 4.54%, down 2 bps in the week through Friday. Prime Inst money fund yields were down 1 bp at 4.78% in the latest week. Government Inst MFs were down 1 bp at 4.65%. Treasury Inst MFs were down 2 bps at 4.58%. Treasury Retail MFs currently yield 4.36%, Government Retail MFs yield 4.37%, and Prime Retail MFs yield 4.55%, Tax-exempt MF 7-day yields were down 23 bps to 3.00%.
Assets of money market funds rose by $37.2 billion last week to a new record high $6.870 trillion according to Crane Data's Money Fund Intelligence Daily. Assets reached its previous record high Thursday Oct. 31 at $6.862 trillion. For the month of October, MMF assets increased by $97.5 billion, after increasing by $149.8 billion in September. Weighted average maturities were up 1 day at 35 days for the Crane MFA and up 1 day at 36 days for the Crane 100 Money Fund Index.
According to Monday's Money Fund Intelligence Daily, with data as of Friday (11/1), 45 money funds (out of 775 total) yield under 3.0% with $27.5 billion in assets, or 0.4%; 102 funds yield between 3.00% and 3.99% ($139.9 billion, or 2.0%), 625 funds yield between 4.0% and 4.99% ($6.613 trillion, or 96.3%) and just 3 funds now yield 5.0% or more ($89.1 billion, or 1.3%).
Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was unchanged at 0.51%, after dropping 2 basis points three weeks prior. The latest Brokerage Sweep Intelligence, with data as of Nov. 1, shows that there was only one change over the past week. Merrill Lynch lowered rates again for their advisory accounts, now at 4.67% (down 2 bps from the week prior). 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. (Note: Six weeks prior we added advisory rates to Brokerage Sweep Intelligence for Merrill Lynch and Morgan Stanley.)
In other news, Reuters tells us, "Capital One warns of potential enforcement action over savings accounts." It states, "A top federal agency may pursue enforcement action against Capital One (COF), over alleged misrepresentations related to its savings accounts, the consumer lender disclosed in a filing.... The company is responding to a letter the Consumer Financial Protection Bureau (CFPB) sent it earlier this month. The agency may also pursue litigation, Capital One warned. At the center of the controversy is a lawsuit filed by some customers last year, who alleged that the company introduced a new '360 Performance Savings' account with a higher interest rate than it was paying to customers of another account, '360 Savings.'"
The article says, "The customers claimed that this mismatch was not clearly communicated, resulting in them missing out on potential earnings. Capital One said it had a contractual right to change interest rates at its discretion and information about the new account was always available on its website. The company had filed a motion to dismiss the customers' lawsuit, a spokesperson told Reuters. CFPB declined to comment."
It adds, "The probe comes as the company is awaiting regulatory approvals for its $35.3 billion acquisition of Discover Financial Services (DFS.N), which could reshape the payments industry. Last week, New York Attorney General Letitia James said she was investigating if the deal violates the state's antitrust law. In July, Capital One said it will commit $265 billion over five years to lending, philanthropy and investment if its takeover goes through."
The Capital One SEC filing states (on page 145) under, "Savings Account Litigation and Related Government Investigation," "On July 10, 2023, we were sued in a putative class action in the Eastern District of Virginia by savings account holders alleging breach of contract and a variety of other causes of action relating to our introduction of a new savings account product with a higher interest rate than existing savings account products. Since the original suit, we have also been sued in six similar putative class actions in federal courts in California, Illinois, Ohio, Virginia, New Jersey and New York.... Plaintiffs filed a consolidated complaint on July 1, 2024 and the court set a trial date in July 2025. We filed a motion to dismiss the consolidated complaint, which is fully briefed and pending with the court."
It tells us, "In August 2024, we received a Civil Investigative Demand from the Consumer Financial Protection Bureau ('CFPB') relating to the savings account products at issue in the litigation. In October 2024, the CFPB issued a Notice of Opportunity to Respond and Advise ('NORA') letter indicating that the CFPB is considering an enforcement action against us on similar grounds as the claims in the Savings Account Litigation. We are responding to the NORA letter and it is possible the CFPB will pursue an enforcement action, including possible litigation, at the end of the NORA process."
On "Deposit Insurance Assessments," it says, "On November 16, 2023, the Federal Deposit Insurance Corporation ("FDIC") finalized a rule to implement a special assessment to recover the loss to the Deposit Insurance Fund ("DIF") arising from the protection of uninsured depositors in connection with the systemic risk determination announced on March 12, 2023, following the closures of Silicon Valley Bank and Signature Bank. In December 2023, the FDIC provided notification that they would be collecting the special assessment at an annual rate of approximately 13.4 basis points ("bps") over eight quarterly collection periods, beginning with the first quarter of 2024 with the first payment due on June 28, 2024.... The special assessment base is equal to an insured depository institution's estimated uninsured deposits reported on its Consolidated Reports of Condition and Income as of December 31, 2022 ("2022 Call Report"), adjusted to exclude the first $5 billion of uninsured deposits." For more, see also Crane Data's Link of the Day, "WSJ Says High Yield Savings Deceptive (3/1/24).
Finally, a brief on CBS News explains, "Warren Buffett sitting on over $325 billion cash." It states, "Warren Buffett is now sitting on more than $325 billion cash after continuing to unload billions of dollars worth of Apple and Bank of America shares this year and continuing to collect a steady stream of profits from all of Berkshire Hathaway's assorted businesses without finding any major acquisitions.... CFRA Research analyst Cathy Seifert said shareholders will wonder why Buffett is continuing to accumulate so much cash. 'Are they more pessimistic about the future economic and market picture than perhaps others are?' she said."
