Money market mutual funds continued rebounding strongly from their debt ceiling concern-related declines in the latest week. ICI's latest "Money Market Mutual Fund Assets" says, "Total money market mutual fund assets increased by $54.55 billion to $2.668 trillion for the week ended Wednesday, October 23, the Investment Company Institute reported today. Taxable government funds increased by $28.13 billion, taxable non-government funds increased by $28.31 billion, and tax-exempt funds decreased by $1.89 billion." According to our MFI Daily, money fund assets have increased for 5 consecutive days, every day since the resolution was announced on October 16.

Money fund assets had declined by $52.3 billion last week -- their largest drop since August 2, 2011 (the week of the last debt ceiling scare) -- and their rebound this week was the largest since Jan. 7, 2009. Year-to-date, money fund assets are now up, though fractionally, for the year, up $3 billion, or 0.1%. Since May 1 of this year, money fund assets have increased by $105 billion, or 4.1%. According to our daily statistics, money fund assets rose by $8.9 billion Oct. 17, $16.2 billion on Oct. 18, $1.8 billion on Oct. 21, $11.7 billion on Oct. 22, and $9.7 billion on Oct. 23.

ICI's latest weekly explains, "Assets of retail money market funds decreased by $8.45 billion to $928.13 billion. Taxable government money market fund assets in the retail category decreased by $1.58 billion to $198.61 billion, taxable non-government money market fund assets decreased by $5.50 billion to $536.23 billion, and tax-exempt fund assets decreased by $1.37 billion to $193.30 billion."

It adds, "Assets of institutional money market funds increased by $63.00 billion to $1.740 trillion. Among institutional funds, taxable government money market fund assets increased by $29.71 billion to $725.59 billion, taxable non-government money market fund assets increased by $33.80 billion to $943.62 billion, and tax-exempt fund assets decreased by $520 million to $70.52 billion."

In other news, ICI also posted a "Viewpoint" earlier this week entitled, "'Sponsor Support' for Money Market Funds Is Old -- and Overblown -- News <i:http://www.ici.org/viewpoints>`_." It explains, "A story in the October 21 issue of the Financial Times ("Almost 20 money market funds bailed out") takes old numbers and tries to present them as news. Contrary to its suggestion, U.S. money market funds have not incurred threatening losses since the financial crisis of 2007–2009."

Mike McNamee writes, "At ICI, we've looked at every data source available on sponsor support -- a study by the Federal Reserve Bank of Boston, data from the U.S. Securities and Exchange Commission, and public filings of fund sponsors. These data show that in almost every case, "support" in 2010 and 2011 reflected sponsors' decisions to remove very small losses incurred during the financial crisis from their funds' books. Those actions were caused by the financial crisis -- not by later events."

He tells us, "The exceptions? In three cases, the funds' sponsors bought downgraded securities out of the funds' portfolios to maintain the funds' AAA ratings. In three other cases, the sponsors bought the funds' holdings of British Petroleum securities to limit risks to investors in the middle of the Deepwater Horizon oil spill. At no time was any of those six funds in danger of taking losses or breaking the dollar, and the sponsors received full value when the purchased securities matured."

Finally, ICI says, "All of these instances have been well known to regulators and rating agencies for a year, as evidenced by this article. And nothing we have seen since -- including the outflows caused by last week's standoff over the U.S. debt ceiling -- indicates that money market funds have needed support "to prevent them from making losses since the 2007-09 financial crisis."

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