Yields Lower; Sweep Rates 0.01%

Apr 21 20

Money market fund yields, which fell below the 1.0% level five weeks ago and below the 0.5% level three weeks ago, continued their march downwards towards zero in the latest week. Our flagship Crane 100 Money Fund Index was down 2 basis points over the past week (through Friday, 4/17) to 0.32%, according to Money Fund Intelligence Daily. The Crane 100 is down from 1.46% at the start of the year and down 1.91% from the beginning of 2019 (2.23%). Our Crane Brokerage Sweep Index has already hit the floor, at 0.01% (for balances of $100K). It's down 27 bps from the end of 2018 (0.28%). The latest Brokerage Sweep Intelligence, with data as of April 17, shows no rate cuts this past week. All of major brokerages now offer rates of 0.01% for balances of $100K. While some funds have already hit the zero floor, most money funds maintain a yield advantage over sweeps and bank deposits, though perhaps not for much longer. As of Friday, 197 funds (out of 852 total) yielded 0.00% or 0.01% with total assets of $439.2 billion, or 9.0% of total assets. (This is up from 155 funds last week with $217.3B in assets.) There were 100 funds yielding between 0.02% and 0.10%, totaling $618.8B, or 12.7% of assets; 178 funds yielded between 0.11% and 0.25% with $1.085 trillion, or 22.3% of assets; 226 funds yielded between 0.26% and 0.50% with $1.588 trillion in assets, or 32.6% ; 145 funds yielded between 0.51% and 0.99% with $1.139 trillion in assets or 23.4%; only one fund yielded over 1.00% with $2.7B or, 0.6% of total assets. The Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 674), shows a 7-day yield of 0.26%, down 3 basis points in the week through Friday, April 17. Prime Inst MFs were down 4 bps to 0.54% in the latest week, while Government Inst MFs fell by 3 bps to 0.23% and Treasury Inst MFs dropped by 3 bps to 0.17%. Treasury Retail MFs currently yield 0.03%, (down 1 basis point), Government Retail MFs yield 0.10% (down 2 bps), and Prime Retail MFs yield 0.46% (down 7 bps), Tax-exempt MF 7-day yields dropped by 55 bps to 0.25%. Yesterday's Brokerage Sweep Intelligence shows rates unchanged. No brokerage sweep rates or money fund yields have dropped to zero or gone negative to date, but this could become a distinct possibility in coming weeks or months. Crane's Brokerage Sweep Index has been flat for the last two weeks, after falling to 0.01% (for balances of $100K). Ameriprise, E*Trade, Fidelity, Merrill Lynch, Morgan Stanley, Raymond James, RW Baird, Schwab, TD Ameritrade, UBS and Wells Fargo all currently have rates of 0.01% for balances at the $100K tier level (and almost every other tier too).

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