Yields continued sliding in February 2008. The Crane 100 Money Fund Index, a measure of the 100 largest taxable money market mutual funds' 7-day (simple, annualized) yields, fell by 58 basis points (or 0.58%) to 3.27% during the month. The broader Crane Money Fund Average, a measure of 850 taxable funds, declined from 3.40% to 2.87% during February. Meanwhile, the Crane Tax Exempt Money Fund Index plunged then rebounded during the month, ending a mere 2 basis points lower at 2.36%.

Over the past six months, as the Federal Reserve has lowered its target Fed funds rate from 5.25% to 3.00%, the Crane 100 has fallen from 5.01% to 3.27%, the Crane Money Fund Average has declined from 4.76% to 2.87%, and the Crane Tax Exempt Index has dropped from 3.38% to 2.36%. A year ago, the Crane 100 was 4.99%, the Crane MFA was 4.88% and the Crane T-E was 3.13%.

The highest-yielding retail and institutional money funds have already fallen below 4%, and top-yielding bank savings Countrywide just reduced its rate from 4.25% to 4.16%. The remaining handful of banks paying over 4% should fall by the wayside very soon as expectations of yet more Fed cuts dominate the money markets. Yields should continue drifting lower ahead of the Federal Reserve's March 18 meeting, when markets expect another 50 basis point, and perhaps even a 75 bps, cut.

For more on the February 2008 Crane Money Fund Indexes, including the components, calculation methodology and latest copy of our Crane Index product, or for information on our suite of money market performance benchmarks in general, contact us at: info@cranedata.us.

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