While it briefly appeared as if the party was ending for money market mutual fund assets, following a 3-week, $118 billion decline in late April, the inflows have returned with a vengeance. The latest weekly totals from ICI show money fund assets continuing their strong post-tax-season rebound, rising $25.8 billion to $3.498 trillion. Last week funds jumped $54 billion and it appears likely that assets will shortly retake their record levels just above $3.5 trillion.

Institutional investors once again drove the inflows, with a gain of $30.54 billion to $2.265 trillion. This puts assets back to a mere $2 billion below their pre-April 15 record level, and pushes the institutional funds' total of all money fund assets to a record 64.7%, almost two-thirds of the overall total. Just decade ago, these percentages were reversed, with Retail money funds accounting for 63% of all money fund assets.

Retail money funds showed outflows of $4.77 billion to $1.233 trillion, but these assets are still up a brisk 22% ($224 billion) over the past 52 weeks. Institutional assets, however, have increased by a massive 53.6% since May 2007, or $790 billion. Overall money fund assets remain up by over $1 trillion over the trailing 52 weeks, an increase of 40.8%. Year-to-date, money funds have gained $353 billion, or 11.2%, following their record-breaking increases of $763 billion (32.0%) in 2007.

As we've said recently, we expect money fund inflows to slow from this torrid pace, though the increases should remain in the double-digits. Even the possibility of higher short-term interest rates later this year shouldn't be enough to reverse the harmonic convergence of events pushing cash into money markets.

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