Money fund yields (7-day, annualized, simple, net) declined by 6 bps to 4.03% on average during the week ended Friday, September 19 (as measured by our Crane 100 Money Fund Index), after falling 1 bp the week prior. Fund yields should continue to slide lower in the coming weeks after the Fed cuts rates by 25 bps on September 17. They've declined by 103 bps since the Fed first cut its Fed funds target rate by 50 bps on Sept. 18, 2024, and they've declined by 60 bps since the Fed last cut rates by 1/4 point on 11/7/24. Yields were 4.11% on 8/31, 4.12% on 7/31, 4.13% on 6/30, 4.10% on 5/31, 4.13% on 4/30/25, 4.14% on 3/31/25 and 4.28% on average on 12/31/24. MMFs averaged 4.75% on 9/30/24, 5.10% on 6/28/24, 5.14% on 3/31/24 and 5.20% on 12/31/23. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 676), shows a 7-day yield of 3.93%, down 6 bps in the week through Friday. (Note: Thank you to those of you who attended our European Money Fund Symposium in Dublin! Safe travels home!)
Prime Inst money fund yields were down 8 bps at 4.15% in the latest week. Government Inst MFs were down 6 bps at 4.04%. Treasury Inst MFs were down 5 bps at 3.95%. Treasury Retail MFs currently yield 3.72%, Government Retail MFs yield 3.76%, and Prime Retail MFs yield 3.96%, Tax-exempt MF 7-day yields were down 1 bp to 2.33%.
Assets of money market funds rose by $6.1 billion last week to $7.658 trillion, according to Crane Data's Money Fund Intelligence Daily. MMF assets hit a record high of $7.677 trillion on September 18, breaking above a previous high of $7.672 trillion set on September 10. For the month of September (MTD), MMF assets have increased $56.1 billion after increasing by $132.0 billion in August, $63.7 billion in July, $6.7 billion in June, $100.9 billion in May, decreasing $24.4 billion in April, increasing by $2.8 billion in March, $94.2 billion in February, $52.8 billion in January, $110.9 billion in December, $200.5 billion in November, and $97.5 billion in October.
Weighted average maturities were at 42 days for the Crane MFA and 42 days the Crane 100 Money Fund Index. According to Monday's Money Fund Intelligence Daily, with data as of Friday (9/19), 115 money funds (out of 787 total) yield under 3.0% with $142.6 billion in assets, or 1.9%; 327 funds yield between 3.00% and 3.99% ($1.799 trillion, or 23.5%), 345 funds yield between 4.0% and 4.99% ($5.717 trillion, or 74.6%) and following the recent rate cut there continue to be zero funds yielding 5.0% or more.
Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was down 1 bp at 0.39%, after falling 1 bp eighteen weeks prior. The latest Brokerage Sweep Intelligence, with data as of September 19, shows one changes over the past week. Fidelity lowered rates to 2.07% for all accounts of $1K to greater than $5 million. 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.
In other news, CoinDesk says, "Galaxy Digital Said to Plan Its Own Tokenized Money Market Fund." The piece explains, "Galaxy's tokenized fund will ultimately be available on the Ethereum, Solana and Stellar blockchains, said a person familiar with the plans. Galaxy Digital (GLXY), the digital asset investment firm led by Mike Novogratz, is planning to release a tokenized money-market fund, according to two people familiar with the plan. The New York City-based company is aiming to bring a more crypto-native twist to the range of traditional finance-led tokenized fund offerings, such as BlackRock's BUIDL and Franklin Templeton's BENJI token, said the people, who declined to be identified."
The London-based Financial News asks, "Think banks face tough competition now? Just wait for tokenised money market funds." It explains, "Mainstream banks have lost serious chunks of market share in recent years. Fintechs have made big inroads into banking for smaller businesses; private credit funds are taking over banks lending to medium-sized companies; and specialist firms such as Jane Street and Citadel have grown as big as the Wall Street giants in securities trading."
"Now there seem to be mounting threats to the core of banks' business: deposits. One challenge comes from stablecoins, cryptocurrencies where the value is pegged to a real world asset such as the dollar. The US banking industry has warned that deposits could be drained by the growth of stablecoins. To lessen that risk, the Trump administration’s new Genius Act legislation bans US licensed stablecoins from offering interest."
