The July issue of the "Independent Adviser for Vanguard Investors" newsletter writes, "Speaking of yields, [Vanguard] Prime Money Market's yield hit 2.00% on June 21. Strangely, though, Treasury Money Market's yield, currently 1.82%, has often been higher than Federal Money Market's (also 1.82% at month end) -- no doubt due in part to the fact that the Federal fund is Vanguard's required 'sweep' account for investors, meaning demand for paper that fits the fund's profile gets harder to find. The spread between the two money funds' yields has been shrinking since late January 2016 and went negative (Federal's yield being lower than Treasury's yield) about a year ago, with occasional reversions back to 'normal.' The bond market, including ultrashort debt like that used to build Vanguard's money funds, is enormous and tells many tales about the state of the investment markets by virtue of its size and the number of participants trading in it. If you believe in the wisdom of the crowds, then it's worth paying attention to yields, but not without using a critical eye." Note: Crane Data's Money Fund Intelligence Daily still reflects this inversion, primarily due to the longer WAMs (weighted average maturities) of Treasury funds and the massive increase in T-bill issuance this year. We show Treasury Retail MMFs yielding 1.33% on average vs. Government Retail MMFs' yield of 1.24%. Treasury Inst MMFs yield 1.61% vs. 1.65% for Govt Inst MMFs though, as of July 2.

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