Yields on money market mutual funds continued their steep descent in February, as our Crane 100 Money Fund Index fell 51 basis points, from 3.27% on Feb. 29, 2008, to 2.76% as of March 31. Over the past 12 months, the benchmark Crane 100 has 224 basis points from its 5.00% level. The broader Crane Money Fund Average, which tracks 860 taxable money market mutual funds, declined from 2.87% to 2.26% currently. It has fallen from 4.89% as of March 31, 2007.

Over the past two days, however, money fund yields have bounced slightly, with our Crane 100 rising from 2.73% to 2.76%. This is likely temporary, though, due to rebounding Treasury rates. There are undoubtedly more declines in the pipelines based on the Fed's prior 75 bps cut. We expect money fund yields to drift downward slightly, but to stablize around 2.5% (Crane 100) and 2.0% (Crane Average), respectively. While markets are reducing expectations and we expect (and hope) the Fed to be finished, another cut or two is likely still in store.

Sweep, bank and CD yields continue lower as well. Our Brokerage Sweep Intelligence shows customers with $50K to $100K balances earning an average rate of 0.79%, those with $100K to $250K earning 1.02%, and those with $1M to $5M earning 1.97%. Brokerage CDs averaged 2.25% (3-mo), 2.43% (6-mo), and 2.53% (1-year), according to the report.

The April issue of Crane Index and Money Fund Intelligence will contain our full series of money fund and cash investment averages. The pending issue will also feature a profile of UCM Institutional Money Market Fund and discussion with manager Jo Ann Corkran, an article on online money market trading portal Institutional Cash Distributors, and of course extensive coverage of other news impacting the world of money market mutual funds.

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