Money fund yields (7-day, annualized, simple, net) were unchanged at 3.47% on average during the week ended Thursday, April 2 (as measured by our Crane 100 Money Fund Index), after remaining unchanged 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 (and weeks) since the Fed left short-term rates unchanged three weeks ago. 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 682), shows a 7-day yield of 3.37%, unchanged in the week through Thursday. Prime Inst money fund yields were unchanged at 3.59% in the latest week. Government Inst MFs were up 1 bp at 3.47%. Treasury Inst MFs were unchanged at 3.43%. Treasury Retail MFs currently yield 3.20%, Government Retail MFs yield 3.19% and Prime Retail MFs yield 3.37%, Tax-exempt MF 7-day yields were down 6 bps to 2.04%.
Money market mutual fund assets have paused since hitting a record high of $8.280 trillion on March 18, according to our Money Fund Intelligence Daily. Assets have fallen $65.5 billion in the week through Thursday, and they've decreased by $11.5 billion in April month-to-date (through 4/2). MMF assets decreased by $49.3 billion in March, increased by $99.5 billion in February, $32.9 billion in January, $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 last April. Weighted average maturities were at 42 days for the Crane MFA and 44 days the Crane 100 Money Fund Index.
According to Monday's Money Fund Intelligence Daily, with data as of Thursday (4/2), just 163 money funds (out of 792 total) yield under 3.0% with $192.2 billion in assets, or 2.3%, while the vast majority (629) of funds yield between 3.00% and 3.99% ($7.988 trillion, or 97.7%). 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 fifteen weeks prior. The latest Brokerage Sweep Intelligence, with data as of April 2, 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, Federated Hermes' Deborah Cunningham writes, "Make yourself at home," in her latest monthly commentary. She tells us, "In the liquidity space, the first quarter of the year typically sees outflows due largely to a reversal of year-end window-dressing, the corporate tax date on March 15 and preparation for individual tax payments in April. Not so this year.... Substantial assets poured into liquidity products in January and February, pushing industry money market assets to all-time highs in the week just before the [Iran] attacks."
Cunningham explains, "Thankfully, the reason for this was positive -- the attractive yields stemming from the elevated fed funds rate. For an asset class designed to seek stability of principal and ease of redemption, yields are still a main variable. The Federal Reserve raised its benchmark rate so aggressively in 2022 to counter spiking inflation, that even two years after it pivoted to easing, the target range is still attractive. In other words, cash is an asset class -- gaining favor on its own merits, rather than a counter to geopolitical upheaval or anxiety over stocks."
She asks "So the question is what happens when investors think the geopolitical environment has improved enough to rotate back to riskier assets like the stock market? Tradition says they will do just that, either looking to buy low or participate in the economic growth many analysts think will follow the conclusion of the Iran conflict. Some surely will. But we think some of the investors will be warmed by the current yields of money funds, take off their coats and stay awhile."
The Federated piece adds, "Time will tell, but the twist is that the war is likely to keep Fed policymakers on the sidelines longer. The December dot plot only projected one additional quarter-point cut this year, and that didn't halt the inflows. If the spike in oil prices causes inflation to do an about face, it's unlikely the Fed will move at all this year. If that keeps market-based money market yields close to where they are now, appetite should remain." (See also, Morningstar's "Short-Term Rates Remaining Higher for Longer Will Benefit Federated Hermes' Money Market Operations."
Finally, the Federal Reserve Bank of New York's Liberty Street Economics blog published, "The Fed Has Two Tools to Influence Money Market Conditions." It states, "The Federal Reserve's 2022-23 tightening cycle involved the use of two monetary policy tools: changes in administrative rates and changes in the size of its balance sheet. This post highlights the results of a recent Staff Report that explores how these tools affect money market conditions. Using confidential trade-level data, we find that both tools have significant effects on the pricing of funds sourced through repo. These results suggest that the Fed can manage how financing conditions are affected even as it influences economic conditions. For example, the Fed can lower its administrative rates to loosen economic conditions, while shrinking its balance sheet to maintain financing conditions in the money markets."
The blog tells us, "Our analysis focuses on Treasury repurchase agreements (repo), a critical financial market used to secure funding and provide liquidity, with an estimated size of over $5 trillion outstanding in the first half of 2024 (see the appendix of this white paper). Secured funding trades in the U.S. are often documented as repos, and within repo, trades involving Treasury securities are the dominant type. Using data on Treasury repo, then, provides a representative look at secured funding conditions in the U.S."
It comments, "The U.S. Treasury's Office of Financial Research's (OFR) centrally cleared repo collection provides such data. This collection captures most interdealer trading. Furthermore, a portion of dealer-to-client repo transactions are gathered through the central counterparty's Sponsored Service program, providing a window on pricing of trades between dealers and their mutual fund and hedge fund clients."
The post adds, "Dealers are the main intermediaries in secured funding markets, borrowing from cash-rich investors such as money market mutual funds and lending to levered clients such as hedge funds (see this comprehensive report on dealers' intermediary activities). The OFR data allow for the construction of the spreads charged by dealers to intermediate funds, as we observe the repo rate dealers' charge to lend funds to levered clients as well as the rates paid to borrow funds from mutual funds."
