While concerns still remain, higher Treasury bill yields over the past two months are beginning to ease the pressure on Treasury money market mutual funds to partially waive fees in order to avoid negative yields. Yields on Treasury funds have bottomed out over the past three weeks and should soon begin inching higher. Crane Data's Money Fund Intelligence Daily currently shows 1-day yields higher than 7-day yields across all categories of taxable money funds indicating an imminent uptick in yields.

According to the U.S. Treasury's "Daily Treasury Bill Rates" web page, yields on 4-week T-bills have risen from a record low of negative 0.01 on Dec. 11 and Dec. 19 to 0.21% as of yesterday. Thirteen-week yields have risen from near zero to 0.30% over the past two months, and 26-week T-bill yields have risen from a record low of 0.14% on Dec. 19 to 0.52% currently. Fifty-two week T-bill yields have jumped to 0.73% from 0.32% at the end of December.

Though higher yields on T-bills help, fund expenses remain under pressure as older, higher-yielding Treasuries continue to roll off. But Treasury Institutional money market funds showed a 1-day yield (net) of 0.16% as of Tuesday and a 7-day yield of 0.15%, up from 0.14% Feb. 12. Treasury Individual funds showed a 1-day yield average of 0.07% and a 7-day yield of 0.03% as of Feb. 24. Currently, thirty-one funds out of 504 tracked daily by Crane currently are yielding zero, a likely indication that significant portions of fees are being waived.

Treasury Institutional money funds, which account for 72% of all Treasury money fund assets, average expense ratios of 0.29%, while Treasury Individual money funds average 0.64% in expenses. Note that money fund yields are always reported already net of expenses. Note too that overall expense ratios have likely been declining due to partial fee waivers implemented over the past two months.

Since peaking on Dec. 8, 2009, Treasury Institutional money fund assets tracked by MFI Daily have declined by $100.2 billion to $383.1 billion, while Prime Institutional money fund assets have increased by $105.8 billion to $845.0 billion. Assets of Government Institutional funds have increased by $57.3 billion to $401.6 billion.

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