Money Fund Yields Jump Past 3.0%

Nov 08 22

Money fund yields jumped again last week -- our Crane 100 Money Fund Index (7-Day Yield) rose 26 basis points to 3.12% in the week ended Friday, 11/4. Yields rose by 4 basis points the previous week and are up from 2.66% on Sept. 30. Yields should continue to surge higher towards 3.5% as they digest the Fed's Nov. 2nd 75 bps rate hike, and they should jump towards 4.0% by year end, if, as expected, the Fed hikes rates again on Dec. 14. Our broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 677), shows a 7-day yield of 3.00%, up 23 bps in the week through Friday. Prime Inst MFs were up 23 bps to 3.19% in the latest week. Government Inst MFs rose by 24 bps to 3.03%. Treasury Inst MFs up 22 bps for the week at 3.06%. Treasury Retail MFs currently yield 2.84%, Government Retail MFs yield 2.78%, and Prime Retail MFs yield 3.05%, Tax-exempt MF 7-day yields dropped by 3 bps to 1.82%. According to Monday's Money Fund Intelligence Daily, with data as of Friday (11/4), 108 funds (out of 816 total) still yield between 0.00% and 1.99% with assets of $55.0 billion, or 1.1% of total assets; 321 funds yielded between 2.00% and 2.99% with $1.218 trillion, or 26.1%; and 387 funds yield 3.00% or more ($3.680 trillion, or 72.8%). Brokerage sweep rates remained mostly unchanged over the past week. Our Crane Brokerage Sweep Index, the average rate for brokerage sweep clients (almost all of which are swept into FDIC insured accounts; only Fidelity sweeps to a money market fund), was unchanged this past week at 0.34%. The latest Brokerage Sweep Intelligence, with data as of Nov. 4, shows just one rate change over the previous week. Ameriprise Financial Services increased rates to 1.24% for all balances between $1 million and $4.9 million and to 1.49% for all balances over $5 million. Just 3 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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