Money fund yields (7-day, annualized, simple, net) decreased by 1 bp to 3.50% on average during the week ended Friday, January 23 (as measured by our Crane 100 Money Fund Index), after decreasing 2 bps the week prior. Fund yields haven't been below 3.5% since November 2022, and they are down from a recent high of 5.20% in November 2023. They should remain flat in coming days as the market expects the Fed to hold rates steady this week (and perhaps this year). Yields were 3.58% on 12/31/25, 3.78% on 11/30, 3.90% on 10/31, 3.94% on 9/30, 4.11% on 8/31, 4.12% on 7/31, 4.13% on 6/30, 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 681), shows a 7-day yield of 3.40%, down 1 bp in the week through Friday.
Prime Inst money fund yields were unchanged at 3.62% in the latest week. Government Inst MFs were unchanged at 3.51%. Treasury Inst MFs were unchanged at 3.46%. Treasury Retail MFs currently yield 3.23%, Government Retail MFs yield 3.21% and Prime Retail MFs yield 3.41%, Tax-exempt MF 7-day yields were up 6 bps to 1.09%.
Money market mutual fund assets have fallen since hitting a record high of $8.165 trillion on January 6, according to our Money Fund Intelligence Daily. Assets have risen $7.9 billion in the week through Friday, but they've decreased by $16.9 billion in January month-to-date (through 1/23). MMF assets increased by $126.3 billion in December, $132.8 billion in November, $142.1 billion in October, $105.2 billion in September and $132.0 billion in August. They rose by $63.7 billion in July, $6.7 billion in June and $100.9 billion in May. But MMFs decreased $24.4 billion in April. Assets increased by $2.8 billion in March, $94.2 billion in February, and $52.8 billion last January.
Weighted average maturities were at 40 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 (1/23), just 160 money funds (out of 791 total) yield under 3.0% with $190.8 billion in assets, or 2.4%, while the vast majority (631) of funds yield between 3.00% and 3.99% ($7.901 trillion, or 97.6%). No funds yield over 4.0%.
Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was unchanged at 0.30%, after falling 1 basis point five weeks prior. The latest Brokerage Sweep Intelligence, with data as of January 23, shows no changes over the past week. Four of the 10 major brokerages tracked by our BSI offer rates of 0.01% for balances of $100K (and lower tiers). These include: E*Trade, Merrill Lynch, Morgan Stanley and Schwab.
In other news, The Wall Street Journal recently wrote a brief titled, "Stablecoin Rewards Resemble Traditional Loyalty Programs, Says Circle CEO." It says, "The annual payouts on stablecoins offered by crypto platforms are similar in nature to loyalty and reward programs found in traditional products, Circle Internet Group Chief Executive Jeremy Allaire said [last] Thursday. Allaire's comments come as the crypto and banking industries remain locked in a lobbying battle over stablecoin rewards, or yield-bearing token products that banks claim are unregulated deposits that threaten traditional savings accounts."
The brief quotes, "'Even your Uber cash or whatever it is. All of these kinds of products, whether they're in brokerage or in payments or in e-commerce, in credit cards, there's lots of different examples of this,' Allaire told Journal House at the World Economic Forum in Davos, Switzerland. 'And so that's really important, we think, for people who are building products and services that use this technology to be able to do those kinds of things.'"
It adds, "The fight is threatening to derail legislation known as the Clarity Act that is intended to bring crypto into mainstream finance. A Senate Banking Committee vote on the Clarity Act was postponed last week after crypto exchange Coinbase Global abruptly withdrew its support. Coinbase offers a 3.5% reward rate on USD Coin to consumers who participate in its premium program. Circle issues the USD Coin, which has a $74 billion market cap."
Finally, ACT and HSBC Asset Management wrote an article earlier this month, "Stablecoins and tokenised MMFs: opportunities and challenges." They explain, "The financial landscape is undergoing a significant transformation with the emergence of digital assets, particularly stablecoins and tokenised assets. These innovations present both opportunities and challenges for traditional finance practitioners including corporate treasurers. This paper aims to provide a comprehensive overview of stablecoins and tokenised money market funds, highlighting their potential impact on the financial ecosystem, and comment on current developments in certain markets."
The paper says, "Stablecoins are close to $300bn in market cap and reportedly reached $28tn in transaction volume in 2024. The growth has been rapid but still pales in comparison to the scale of traditional finance alternatives to stablecoins, such as deposits and money market funds. Tether (USDT) and Circle (USDC) make up 61% and 25% of the total market cap of stablecoins. USD stablecoins currently account for 99% of the total market cap."
The update comments, "It is worth noting that stablecoins do not, and in most cases are not permitted by regulation, to pay any yield/return. This has been consistently reflected in existing regulation across multiple jurisdictions to distinguish stablecoins as a digital payment instrument and not an investment product. As a result, stablecoins in their current form are not likely to supplant MMFs or interest-bearing deposits as a cash investment vehicle."
It adds, "From a money market fund user perspective, the ability to move (transfer, trade, pledge) units without necessarily redeeming offers significant advantages. Their use as collateral pledged to third parties but also intercompany transfers can only enhance the utility of a money fund holding."
