Wells Fargo Securities Garret Sloan wrote in yesterday's "Daily Short Stuff," "Prime money market funds have gained $3 billion over the past week, even as Treasury funds have lost $4.5 billion and government funds lost $7.4 billion. By contrast, prime retail funds lost $1.3 billion and government retail funds gained $4.1 billion. From a WAM/WAL standpoint, institutional prime fund WAM/WALs are currently at 24/49 days and institutional government funds are at 40/92 days. Based on the Crane indices, the average spread between institutional government and prime currently sits at 24 basis points, with a maximum spread, based on the share classes with the highest balances, of as much as 42 basis points. The spread between prime and government institutional funds over the long-term has been closer to 15 basis points (excluding the financial crisis period). In that context, there has clearly been a sharp increase in the basis between government and prime funds, to the point where the yield differential may begin to outweigh the structural drawbacks of prime funds." (See also our latest Money Fund Intelligence article, "Time for Prime Comeback Say MMF Managers; Rates Higher.)

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