The Wall Street Journal writes "Money Funds Trim Euro-Zone Exposure". It says, "As worries grow about the euro zone's sovereign-debt crisis, U.S. money-market funds have cut investments in the region's banks and shifted money to financial institutions in Norway, Sweden and Canada. The total dollar amount of holdings in commercial paper, certificates of deposit and asset-backed commercial paper sold by euro-zone banks dropped to $361 billion at the end of May, accounting for about 40% of the $902 billion of non-U.S. bank exposure of U.S. money market funds, according to the latest data from J.P. Morgan. U.S. money funds' euro-zone bank exposure was down from about 50.9% at the end of March 2010, when the region's debt crisis started to brew." The Journal quotes Brian Smedley, interest-rate strategist at Bank of America Merrill Lynch, "The critical question for money funds is whether the peripheral crisis eventually engulfs the rest of the European financial system." (Note that subscribers to Crane Data's Money Fund Wisdom product suite should receive the latest set of Money Fund Portfolio Holdings (as of May 31) Tuesday around noon.)
