Crane 100 MF Index Approaches 2.0%

Aug 09 22

Money fund yields jumped again the week after the Fed's 75 bps hike on July 27. Our Crane 100 Money Fund Index (7-Day Yield) rose 33 basis points to 1.89% the week ended Friday, 8/5. Yields rose by 23 basis points the previous week and 6 basis points the week before that. On average, they're up from 1.57% on July 29, up from 1.18% on June 30 and more than triple their level of 0.58% on May 31. MMF yields are up from 0.21% on April 29, 0.15% on March 31 and 0.02% on February 28 (where they'd been for almost 2 years prior). Yields should keep inching higher and should approach 2.0% on average in coming days. Our broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 671), shows a 7-day yield of 1.75%, also up 26 bps in the week through Friday. The Crane Money Fund Average is up 72 bps since beginning of July and up 128 bps from 0.47% at the beginning of June. Prime Inst MFs were up 39 bps to 2.03% in the latest week, up 76 bps since the start of July and up 139 bps since the start of June (close to double from the month prior). Government Inst MFs rose by 30 bps to 1.81%, they are up 71 bps since start of July and up 127 bps since the start of June. Treasury Inst MFs up 25 bps for the week at 1.76%, up 72 bps since beginning of July and up 126 bps since the beginning of June. Treasury Retail MFs currently yield 1.52%, (up 27 bps for the week, up 72 bps since July and up 122 bps since June), Government Retail MFs yield 1.48% (up 30 bps for the week, up 69 bps since July started and up 122 bps since June started), and Prime Retail MFs yield 1.85% (up 40 bps for the week, up 78 bps from beginning of July and up 137 bps from beginning of June), Tax-exempt MF 7-day yields rose by 44 bps to 1.12%, they are up 56 bps since the start of July and up 72 bps since the start of June. According to Monday's Money Fund Intelligence Daily, with data as of Friday (8/5), just 66 funds (out of 818 total) still yield between 0.00% and 0.99% with assets of $69.1 billion, or 1.4% of total assets; 230 funds yield between 1.00% and 1.49% with $366.5 billion in assets, or 7.3%; 139 funds yielded between 1.50% and 1.74% with $1.088 trillion or 21.8%; 179 funds yielded between 1.75% and 1.99% ($1.505 trillion, or 30.1%) and 204 funds yielded 2.00% or more ($1.972 trillion, or 39.4%). Brokerage sweep rates also moved higher over the past week too, as Ameriprise Financial, Fidelity, Merrill Lynch, Raymond James, RW Baird and Schwab all tweaked their rates upwards. Our latest Brokerage Sweep Intelligence shows brokerages paying an average of 0.25% on FDIC insured deposits, up from 0.16% a month ago and 0.05% two months ago. Our Crane Brokerage Sweep Index, the average rate for brokerage sweep clients (most of which are swept into FDIC insured accounts; only Fidelity sweeps to a money market fund), jumped up 7 basis points to 0.25%. This follows increases over the past couple of months but also follows 2 straight years of yields at 0.01%. Sweep yields were 0.12% on average at the end of 2019 and 0.28% on average at the end of 2018. The latest Brokerage Sweep Intelligence, with data as of Aug. 5, shows six changes over the previous week. BSI reports that Ameriprise Financial increased rates to 0.09% for all balances between $1K and $99K, to 0.10% for balances between $100K and $249K, to 0.14% for balances between $250K and $999K, to 0.23% for balances between $1 million and $4.9 million, and to 0.31% for balances of $5 million and over for the week ended August 5. Fidelity increased rates to 1.19% for all balances between $1K and $5 million and more. Merrill Lynch increased rates to 0.05% for balances between $1 million and $9.9 million and to 0.15% for balances over $10 million. Raymond James increased rates to 0.15% for all balances between $1K and $99K, to 0.25% for balances between $100K and $249K, to 0.70% for balances between $250K and $999K, and to 1.00% for balances between $1 million and $5 million. The two other changes came from RW Baird and Schwab, RW Baird increased rates to 0.69% for balances between $1K and $249K, to 0.79% for balances between $250K and $999K, to 1.04% for balances between $1 million and $1.9 million and to 1.38% for balances of $5 million and more. Schwab increased rates to 0.25% for all balances of $1k to $5 million and more. Just three of 11 major brokerages still offer rates of 0.01% for balances of $100K (and most other tiers). These include: E*Trade, Merrill Lynch and Morgan Stanley.

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