ICI's latest "Money Market Fund Assets" report shows assets higher again over the latest week, their fourth increase in the past five weeks. The release says, "Total money market fund assets increased by $12.46 billion to $4.52 trillion for the week ended Wednesday, August 18, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $14.81 billion and prime funds decreased by $2.30 billion. Tax-exempt money market funds decreased by $54 million." Money fund assets are up by $225 billion, or 5.2%, year-to-date in 2021. Inst MMFs are up $323 billion (11.7%), while Retail MMFs are down $98 billion (-6.4%). (Month-to-date in August through 8/18, money fund assets have declined by $14.7 billion to $4.931 billion, according to Crane Data's MFI Daily collection.)

ICI's stats show Institutional MMFs increasing $11.0 billion and Retail MMFs increasing $1.5 billion in the latest week. Total Government MMF assets, including Treasury funds, were $3.959 trillion (87.5% of all money funds), while Total Prime MMFs were $472.7 billion (10.5%). Tax Exempt MMFs totaled $91.2 billion (2.0%). Over the past 52 weeks, money fund assets have decreased by $22 billion, or -0.5%, with Retail MMFs falling by $109 billion (-7.1%) and Inst MMFs rising by $87 billion (2.9%). (Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're almost $400 billion lower than our asset series.)

They explain, "Assets of retail money market funds increased by $1.47 billion to $1.43 trillion. Among retail funds, government money market fund assets increased by $2.35 billion to $1.13 trillion, prime money market fund assets decreased by $840 million to $220.52 billion, and tax-exempt fund assets decreased by $41 million to $79.77 billion." Retail assets account for just under a third of total assets, or 31.6%, and Government Retail assets make up 79.0% of all Retail MMFs.

ICI adds, "Assets of institutional money market funds increased by $10.99 billion to $3.09 trillion. Among institutional funds, government money market fund assets increased by $12.46 billion to $2.83 trillion, prime money market fund assets decreased by $1.46 billion to $252.18 billion, and tax-exempt fund assets decreased by $13 million to $11.42 billion." Institutional assets accounted for 68.4% of all MMF assets, with Government Institutional assets making up 91.5% of all Institutional MMF totals.

In other news, Wells Fargo Securities' Vanessa Hubbard McMichael writes about "Fed RRP: MMFs in focus." She tells us, "[T]he minutes talked about the increase in participation of the Fed's reverse repo facility as it had reached 'its highest level since the facility was put in place', averaging about $800 billion over the most recent inter-meeting period compared to $340 billion over the prior inter-meeting period. The facility is open to a variety of investors, including primary dealers, money market funds, GSEs, and banks, but it was noted in the meeting minutes that the facility saw particularly larger investments from money market funds over the inter-meeting period due to a drop in net T-bill issuance. Month-to-date, the Fed RRP has averaged about $998 billion in August, with the low point at $909 billion and the maximum usage, which happened yesterday, at $1.11 trillion."

The Federal Reserve's recently released "Minutes of the Federal Open Market Committee, July 27–28, 2021," explain, "The manager turned next to a discussion of developments in operations and money markets over the period. Following the June meeting, overnight rates rose in line with the technical adjustment in administered rates and were relatively stable for the remainder of the period. Overnight reverse repurchase agreement (ON RRP) take-up jumped by over $200 billion after the technical adjustment took effect, as government-sponsored enterprises moved balances held in unremunerated Federal Reserve deposit accounts into the higher-yielding ON RRP investments. Government money market funds also increased their participation in the facility amid a continued decline in Treasury bills outstanding and downward pressure on overnight rates. Overall, market participants reported that the technical adjustment went smoothly and that, with overnight rates having moved further away from zero, concerns about the functioning of short-term funding markets had diminished."

They continue, "Looking ahead, market participants were beginning to focus on the potential effects of changes in the Treasury General Account at the Federal Reserve and Treasury bill issuance over coming months in connection with the debt ceiling. The manager noted that, if a number of counterparties reached the per-counterparty limit on their ON RRP investments and downward pressure on overnight rates emerged, it may become appropriate to lift the limit."

On the "Establishment of Standing Repurchase Agreement Facilities," the Fed says, "Finally, the manager summarized the proposed terms for the standing repurchase agreement (repo) facility (SRF) and the Foreign and International Monetary Authorities (FIMA) Repo Facility. In questions and comments following the manager’s briefing, participants expressed broad support for the establishment of the SRF and FIMA Repo Facility. The vast majority of participants supported the proposed terms, although a few participants raised questions.... In general, participants viewed the SRF and FIMA Repo Facility as important new tools, serving in backstop roles, that would support effective policy implementation and smooth market functioning. Participants anticipated that the Committee would learn more about how these facilities operate over time and noted that it could adjust some parameters of the facilities on the basis of that experience."

Finally, they add, "The Federal Open Market Committee authorizes and directs the Open Market Desk at the Federal Reserve Bank of New York, for the System Open Market Account, to conduct operations in which it offers to purchase securities, subject to an agreement to resell. The repurchase agreement transactions hereby authorized and directed shall (i) include only U.S. Treasury securities, agency debt securities, and agency mortgage-backed securities; (ii) be conducted as open market operations with primary dealers and depository institutions as participants; (iii) be conducted with a minimum bid rate of 0.25 percent; (iv) be offered on an overnight basis (except that the Open Market Desk at the Selected Bank may extend the term for longer than an overnight term to accommodate weekend, holiday, and similar trading conventions); and (v) be subject to an aggregate operation limit of $500 billion. The aggregate operation limit can be temporarily increased at the discretion of the Chair. These operations shall be conducted by the Open Market Desk at the Selected Bank until otherwise directed by the Committee."

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