Money market mutual fund yields, as measured by our bellwether Crane 100 Money Fund Index, rose by a mere one basis point yesterday, from 2.25% to 2.26%. But it appears that a bottom is being reached in money fund yields. Yields should inch higher reflecting expectations of hikes in the benchmark Federal funds target rate in coming months.

Yields declined slightly in May, with the Crane 100 7-Day Yield decreasing to 2.34%. Our broader Crane Money Fund Average fell from 2.08% to 2.03% last month, the Crane Institutional Money Fund Index fell from 2.37% to 2.31%, and the Crane Individual MF Index fell from 1.91% to 1.87%. The Crane Tax Exempt MF Index plunged from 2.05% to 1.33%.

For the month ended May 31, 2008, the Crane 100 returned 0.20% for 1-month, 0.65% for 3 months, 1.29% year-to-date, 4.22% over 1-year, 4.35% over 3 years (annualized), 3.09% over 5 years, and 3.55% over 10 years. The Crane MF Average returned 0.17%, 0.56%, 1.13%, 3.89%, 4.13%, 2.89%, and 3.36%, respectively, for these periods.

This past week, the Crane 100 Index, at 2.25%, has been at its lowest level since its introduction in April 2006. Calendar returns have been calculated for prior years, and 2004's 1.07%, 2003's 0.88%, and 2002's 1.57% all indicate that money fund yields have been much lower during this period. (Fed funds was at a record low of 1.00% from June 2003 through June 2004 vs. 2.00% today.)

See the current issue of Crane Index for the full listing of indexes, and subscribers may contact us for a file with our historical index series.

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