MMF Yields Follow Fed Funds Lower
Money fund yields declined by 7 basis points to 4.57% on average during the week ended Friday, Nov. 8 (as measured by our Crane 100 Money Fund Index), after inching down 2 bps the week prior. Yields have just begun reflecting the Federal Reserve's 25 basis point cut on Thursday, so they should continue lower this week (and next). They've declined by 49 bps since the Fed cut its Fed funds target rate by 50 bps percent on Sept. 18 and they've declined by 6 bps since the Fed cut rates by 1/4 point on 11/7. 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. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 672), shows a 7-day yield of 4.48%, down 7 bps in the week through Friday. Prime Inst money fund yields were down 9 bps at 4.69% in the latest week. Government Inst MFs were down 7 bps at 4.58%. Treasury Inst MFs were down 6 bps at 4.51%. Treasury Retail MFs currently yield 4.29%, Government Retail MFs yield 4.29%, and Prime Retail MFs yield 4.48%, Tax-exempt MF 7-day yields were down 56 bps to 2.44%. Assets of money market funds rose by $98.9 billion last week to a new record high $6.969 trillion according to Crane Data's Money Fund Intelligence Daily. Assets reached its previous record high Thursday Nov. 7 at $6.945 trillion. For the month of November, MMF assets have increased by $106.3 billion, after increasing by $97.5 billion in October and $149.8 billion in September. Weighted average maturities were up 1 day at 36 days for the Crane MFA and up 1 day at 37 days for the Crane 100 Money Fund Index. According to Tuesday's Money Fund Intelligence Daily, with data as of Friday (11/8), 115 money funds (out of 786 total) yield under 3.0% with $140.7 billion in assets, or 2.0%; 40 funds yield between 3.00% and 3.99% ($28.6 billion, or 0.4%), 631 funds yield between 4.0% and 4.99% ($6.800 trillion, or 97.6%) and following the recent rate cut there is now zero funds yielding 5.0% or more. Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was down 3 bps at 0.48%, after dropping 2 basis points four weeks prior. The latest Brokerage Sweep Intelligence, with data as of Nov. 8, shows that there were three changes over the past week. Fidelity lowered all rates to 2.32% and Schwab lowered all rates to 0.10%. Merrill Lynch lowered rates again for their advisory accounts, now at 4.63% (down 4 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.
