Money market mutual fund assets rose slightly for the second week in a row, after falling sharply in mid-March. The Investment Company Institute's latest "Money Market Fund Assets" report shows that year-to-date, MMF assets have decreased by $13 billion, or -0.5%. Over 52 weeks they've increased by $175 billion, or 6.6%. ICI's numbers also show Prime money market fund assets decreased after two weeks of increases, while Govt MMF assets jumped for the second week in a row. We review the latest weekly asset totals below, and we also summarize last week's Weekly Money Fund Portfolio Holdings data set and quote from a WSJ article on LIBOR and Prime MMFs.
ICI writes, "Total money market fund assets increased by $3.89 billion to $2.83 trillion for the week ended Wednesday, March 28, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $10.06 billion and prime funds decreased by $4.57 billion. Tax-exempt money market funds decreased by $1.60 billion." Total Government MMF assets, which include Treasury funds too, stand at $2.242 trillion (79.3% of all money funds), while Total Prime MMFs stand at $453.3 billion (16.0%). Tax Exempt MMFs total $133.8 billion, or 4.7%.
They explain, "Assets of retail money market funds decreased by $4.60 billion to $1.01 trillion. Among retail funds, government money market fund assets decreased by $1.53 billion to $618.83 billion, prime money market fund assets decreased by $1.84 billion to $262.32 billion, and tax-exempt fund assets decreased by $1.23 billion to $127.10 billion." Retail assets account for over a third of total assets, or 35.6%, and Government Retail assets make up 61.4% of all Retail MMFs.
ICI's release adds, "Assets of institutional money market funds increased by $8.49 billion to $1.82 trillion. Among institutional funds, government money market fund assets increased by $11.59 billion to $1.62 trillion, prime money market fund assets decreased by $2.73 billion to $190.94 billion, and tax-exempt fund assets decreased by $366 million to $6.66 billion." Institutional assets account for 64.4% of all MMF assets, with Government Inst assets making up 89.1% of all Institutional MMFs.
In other news, Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics and summary last week. Our weekly holdings track a shifting subset of our monthly Portfolio Holdings collection, and the latest cut (with data as of March 23) includes Holdings information from 76 money funds (up 9 from 2/23), representing $1.404 trillion (down from $1.584 trillion on 2/23) of the $2.967 (47.3%) in total money fund assets tracked by Crane Data. (For our monthly Holdings recap, see our March 12 News, "March Money Fund Portfolio Holdings: Treasuries Jump, Repo, CD Down.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Repurchase Agreements (Repo) totaling $458.2 billion (down from $590.0 billion a month ago), or 32.6%, Treasury debt totaling $503.7 billion (up from $475.3 billion) or 35.9%, and Government Agency securities totaling $293.0 billion (down from $329.6 billion), or 20.9%. Commercial Paper (CP) totaled $51.2 billion (down from $62.6 billion), or 3.6%, and Certificates of Deposit (CDs) totaled $37.7 billion (down from $45.7 billion), or 2.7%. A total of $27.9 billion or 2.0%, was listed in the Other category (primarily Time Deposits), and VRDNs accounted for $32.3 billion, or 2.3%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $503.7 billion, Federal Home Loan Bank with $231.9B, BNP Paribas with $62.6 billion, Federal Farm Credit Bank with $38.3B, RBC with $34.5B, Wells Fargo with $30.5B, Credit Agricole with $28.1B, Societe Generale with $27.4B, HSBC with $23.8B, and Nomura with $23.3B.
The Ten Largest Funds tracked in our latest Weekly include: JP Morgan US Govt ($126.8B), Fidelity Inv MM: Govt Port ($105.9B), BlackRock Lq FedFund ($96.9B), Goldman Sachs FS Govt ($90.9B), Wells Fargo Govt MMkt ($76.3B), Blackrock Lq T-Fund ($71.6B), Dreyfus Govt Cash Mgmt ($62.5B), State Street Inst US Govt ($53.3B), Goldman Sachs FS Trs Instruments ($52.3B), and Morgan Stanley Inst Liq Govt ($46.2B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary, or our Bond Fund Portfolio Holdings data series.)
Finally, The Wall Street Journal wrote again on LIBOR in "Banking System Alarm Bell That Doesn’t Signal Danger." This time they mentioned money market funds, saying, "A crisis-era red light is flashing and provoking old fears about banks. But the world has changed a lot since 2008: this signal no longer means banks are struggling to find cash. The basic cost of money lent between banks has seen a sharp rise over recent weeks. In the U.S., the cost to borrow over three months has risen much faster than the Federal Reserve has raised interest rates."
It explains, "Libor, this measure of how much banks charge to lend to each other, is the rate that shot-up during the crisis when a complete failure of trust between banks froze the money markets. It is the rate that found infamy when banks were shown to have been manipulating it too. However, there are several prongs to Libor’s recent rise: one is underlying interest rate raises; another is an expected flood of U.S. treasury-bill selling. Then there is the cost of short-term borrowing in commercial paper markets, which is where people get worried because banks use these for some of their funding."
The Journal adds, "Some point to the shrinking investor base for so-called prime money-market funds, which are key buyers of commercial paper. Total prime fund assets have fallen by $1 trillion since the end of 2015, when a regulatory change sparked outflows. All that cash went into money-market funds that only invest in government-backed paper. However, outflow isn’t as damaging as it seems. Prime money funds haven’t made their biggest cuts in holdings of commercial paper. Instead they’ve pulled much more out of certificates of deposit, a kind of tradable deposit from banks, credit card companies and others that is often covered by Federal deposit insurance."
