The November issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers Monday morning, features the articles: "Money Funds Getting Hot: Barron's, FT, WSJ Articles," which discusses the growing interest in and on cash; "Morgan Stanley Talks ESG at AFP; Names OFN for Impact," which reviews Scott Wachs' session on DE&I; and, "Schwab on Cash Sorting; Sweeps Shifting to MMFs," which quotes from the brokerage's recent earnings updates. We also sent out our MFI XLS spreadsheet Monday a.m., and we've updated our Money Fund Wisdom database with 10/31/22 data. Our November Money Fund Portfolio Holdings are scheduled to ship on Wednesday, Nov. 9, and our October Bond Fund Intelligence is scheduled to go out on Tuesday, Oct. 15. (Note: Our MFI, MFI XLS and Crane Index products are all available to subscribers via our Content center. Note too: Crane Data and money market funds will be closed Friday, 11/11, for the Veterans Day Holiday.)

MFI's "Getting Hot" article says, "Money market mutual funds are hot and getting hotter, with articles on them appearing in Barron's, The Wall Street Journal and the Financial Times over the past 2 weeks. Barron's piece, 'Yields on Money-Market Mutual Funds Near 3%,' explains, 'Cash hasn't looked this good in money-market mutual funds for a long time. Yields are averaging 2.77% [now 2.96%], up from 0.02% in early January, according to Crane Data. Retail money funds could soon cross the 3% threshold, assuming that the Federal Reserve keeps raising its benchmark federal-funds rate.'"

It continues, "'Money funds follow the Fed, so there's no mystery of where yields are going,' says Peter Crane.... 'You haven't seen 3% to 4% yields since prior to the [2008-09] financial crisis,' he adds."

Our "Morgan Stanley" piece states, "Late last month, the Association for Financial Professionals hosted AFP 2022, the largest gathering of corporate treasury and cash managers in the country. The event included several sessions on money market fund investing, including one hosted by Morgan Stanley Investment Management's Scott Wachs entitled, 'Navigating Transformation in The Liquidity Investment Ecosystem.' Like some of the other sessions and a lot of the exhibit hall talk, rising rates, ESG investing, regulatory reforms and technology featured prominently in the discussion. We quote from some of the comments below, and also excerpt from a Morgan Stanley press release on its Impact share class."

It says, "Wachs tells the Philadelphia audience, 'There are a confluence of factors across many, many different dimensions in liquidity investments that have changed, or that we anticipate are going to change pretty dramatically over the course of the next few years. So, this is a really important time for Treasury professionals to think about and consider what those changes have been and what those changes will be. How do they impact how you do your jobs, how does that change best practices and how do you optimize your liquidity investments?'"

Our "Cash Sorting" piece states, "On Charles Schwab's '2022 Fall Business Update,' CFO Peter Crawford comments, 'Bank deposits were down 10% ... due to client cash allocation decisions that were broadly consistent with our expectations, given the dramatic increase in rates.... Looking ahead to 2023, we continue to see no reason that the magnitude of client cash sorting will be dramatically different than the last rising rate environment, suggesting balances trough at some point next year.'"

MFI writes, "He explains, 'There's obviously been a lot of commentary, perhaps too much, on the topic of client cash sorting, and we continue to receive a lot of questions. I emphasize that this is a dynamic which we view as very much temporary, quite manageable, and not a factor in our long-term performance.'"

MFI also includes the News brief, "Fed Hikes 6th Time in '22; Rates Head to 4%. The Federal Reserve raised short-term interest rates for the 6th time this year and hiked by 75 basis points for the fourth time in a row. The Federal funds target rate is now in a range from 3.75% to 4.00%, its highest level since 2008. Money fund yields should surge again next week and approach 3.5% in coming weeks and 4.0% by year end."

Another News brief, "SEC Reopens Comments on Reforms, Then Closes Them Again," says, "Their release, sent out `Oct. 11, 'SEC Reopens Comment Periods for Several Rulemaking Releases Due to Technological Error in Receiving Certain Comments' tells us, 'The Securities and Exchange Commission ... reopened the public comment periods for 11 Commission rulemaking releases ... due to a technological error.... The Commission is reopening the comment periods for the affected releases until 14 days following publication of the reopening release in the Federal Register.' The period (and mystery) has now ended. See the latest 'Comments on Money Market Fund Reforms.') See also, 'SEC Proposes Enhancements to Open-End Fund Liquidity Framework,' which proposes swing pricing for bond and stock funds."

Also, a sidebar, "Q3'22 Earnings: No Waivers," states, "Federated Hermes' Q3'22 earnings and quarterly earnings call discussed the end of money fund fee waivers, increases in retail money fund assets, pending money fund regulations and more. Federated's release explains, 'There were no material voluntary yield-related fee waivers during the quarter ended Sept. 30, 2022. During the nine months ended Sept. 30, 2022, voluntary yield-related fee waivers totaled $85.3 million.... During the three and nine months ended Sept. 30, 2021, voluntary yield-related fee waivers totaled $109.2 million and $310.2 million, respectively.'"

Another sidebar, "Chinese MF Developments," says, "Reuters writes, 'China Seeking to Curb Liquidity Risks in $1.4 Trln Money Market Fund – Sources.' They explain, 'Chinese regulators have urged money market fund managers to improve investor structure and ensure adequate holdings of liquid assets, three sources told Reuters, as authorities seeks to head off liquidity risks in the $1.4 trillion sector. Securities regulators have recently asked fund managers to prevent an excessive proportion of institutional investors in money market funds, the sources said. For those funds with more than 70% of assets held by institutions, fund managers must ensure that at least 20% of the money is invested in liquid assets, while bond durations must be kept within 70 days.'"

Our November MFI XLS, with October 31 data, shows total assets increased $42.2 billion to $5.073 trillion, after increasing $1.7 billion in September, $2.3 billion in August, $26.0 billion in July and $31.9 billion in June, but decreasing $10.7 billion in May and $74.3 billion in April. MMFs increased $24.1 billion in March, decreased $34.6 billion in February and decreased $128.1 billion in January. Assets increased $104.6 billion in December and $49.7 billion in November. Our broad Crane Money Fund Average 7-Day Yield was up 32 bps to 2.74%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was up 22 bps to 2.85% in October.

On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 both were both higher at 3.10% and 3.06%, respectively. Charged Expenses averaged 0.39% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses on Tuesday once we upload the SEC's Form N-MFP data for 10/31/22.) The average WAM (weighted average maturity) for the Crane MFA was a record low 16 days (down 2 day from previous month) while the Crane 100 WAM decreased 2 days to 15 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)

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