The Federal Reserve Board released its latest Z.1 "Flow of Funds" report for the First Quarter of 2010. It showed money fund assets falling sharply in Q1, down $328 billion, or 10.0%, led downwards by funding corporations (which includes securities lenders), nonfinancial corporate businesses, and the household sector. Each of these three segments accounted for well over $100 billion in declines.

The Federal Reserve's L.206 table, "Money Market Mutual Fund Shares," says the Household Sector remains the largest segment of money fund holders with $1.202 trillion, or 41.0% of all assets. Assets here declined by $118 billion, or 8.9% in the first quarter of 2010, and assets have declined by $345 billion, or 22.3% over the past 12 months.

Funding Corporations represent the second largest money fund investor segment with $786 billion, or 26.8% of assets, according to the Fed's statistics. Sec lending, which dominates this category, saw its investment in money funds drop by $138 billion, or 14.9% in Q1. Money funds assets here declined by $282 billion, or 26.4%, over the past year.

Nonfinancial Corporate Business ranks third in money fund holdings with $563 billion, or 19.2%. Companies' holdings of money funds plunged $121 billion, or 17.6% in the first three months of this year, while assets have declined by $184 billion, or 17.6%, over the past year. Other segments of money fund investors tracked by the Fed include: Nonfarm corporate businesses ($72 billion, 2.4% of assets), State and local governments ($91 billion, or 3.1%; this was the only segment to show an increase in assets), and `Private pension funds ($96 billion, or 3.3%).

Money market mutual funds reduced their holdings of Agency and GSE backed securities, Time and savings deposits and Open market paper by the largest amounts in the quarter, with assets declining by $78 billion, $69 billion, and $62 billion, respectively. Over the past year, money funds have seen Agency holdings plunge by $311 billion, Treasury securities fall by $145 billion and open market paper (which we believe means CP) fall by $130 billion. (Let us know if you'd like to see our spreadsheet with money fund info from the Fed's Z.1 series.)

See also, today's Wall Street Journal, which writes on the Z.1. series with "U.S. Firms Build Up Record Cash Piles". It says, "U.S. companies are holding more cash in the bank than at any point on record, underscoring persistent worries about financial markets and about the sustainability of the economic recovery. The Federal Reserve reported Thursday that nonfinancial companies had socked away $1.84 trillion in cash and other liquid assets as of the end of March, up 26% from a year earlier and the largest-ever increase in records going back to 1952. Cash made up about 7% of all company assets, including factories and financial investments, the highest level since 1963."

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