Hot Summer Continues for MMF Assets
Money funds are continuing their summer asset tear in August. ICI's latest "Money Market Mutual Fund Assets" report shows assets up for the third straight week. It says, "Total money market fund assets increased by $11.01 billion to $2.69 trillion for the week ended Wednesday, August 19, the Investment Company Institute reported today. Among taxable money market funds, Treasury funds (including agency and repo) increased by $7.01 billion and prime funds increased by $3.01 billion. Tax-exempt money market funds increased by $980 million. Assets of retail money market funds increased by $4.59 billion to $881.06 billion. Among retail funds, Treasury money market fund assets increased by $1.11 billion to $199.13 billion, prime money market fund assets increased by $2.57 billion to $501.34 billion, and tax-exempt fund assets increased by $910 million to $180.59 billion. Assets of institutional money market funds increased by $6.41 billion to $1.80 trillion. Among institutional funds, Treasury money market fund assets increased by $5.90 billion to $811.05 billion, prime money market fund assets increased by $440 million to $925.53 billion, and tax-exempt fund assets increased by $70 million to $68.05 billion." Year-to-date, money fund assets are now down just $47 billion, or about 2%. Assets have been up 7 of the last 9 weeks and the past 4 months in a row. In other news, The Wall Street Journal writes, "Fed Preps September Term Reverse Repos as Extra Rate-Rise Tool." It says, "The Federal Reserve Bank of New York said it would again offer a "supplementary tool" called term reverse repos in September as a way of supporting its main levers for raising rates when the time comes. The New York Fed said in a statement Wednesday it had been instructed by the Federal Open Market Committee, a special rate-setting panel, to examine how the term reverse repos could support its key monetary policy tools when it moves to raise rates for the first time in nearly a decade.... In March, the FOMC authorized the New York Fed markets desk to conduct term repos over the end of each quarter, through Jan. 29, 2016." It continues, "The New York Fed's markets desk said it had been "working internally and with market participants" on how the reverse repo program would work in practice to control the federal-funds rate when it is taken out of test mode, where it has been for almost two years.... For the end of September this year, the desk said it plans to offer $200 billion in term reverse repos in addition to the overnight reverse repos it plans to use at liftoff. Currently, the overnight repos are capped at $300 billion."
