ICI's latest weekly "Money Market Fund Assets" report shows money fund assets jumping over the past week, their 4th increase in the past 5 weeks. Over the past 52 weeks, money fund assets are up by $49 billion, or 1.1%, with Retail MMFs rising by $182 billion (12.7%) and Inst MMFs falling by $133 billion (-4.2%). ICI shows assets down by $34 billion, or -0.7%, year-to-date, with Institutional MMFs down $180 billion, or -5.6% and Retail MMFs up $146 billion, or 9.9%. (Note: Register soon for our upcoming Money Fund University, which will be Dec. 15-16 in Boston!)
The weekly release says, "Total money market fund assets increased by $29.93 billion to $4.67 trillion for the eight-day period ended Wednesday, November 30, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $26.99 billion and prime funds increased by $6.15 billion. Tax-exempt money market funds decreased by $3.21 billion." ICI's stats show Institutional MMFs rising $25.9 billion and Retail MMFs increasing $4.1 billion in the latest week. Total Government MMF assets, including Treasury funds, were $3.953 trillion (84.6% of all money funds), while Total Prime MMFs were $609.3 billion (13.0%). Tax Exempt MMFs totaled $108.4 billion (2.3%).
ICI explains, "Assets of retail money market funds increased by $4.07 billion to $1.61 trillion. Among retail funds, government money market fund assets decreased by $1.00 billion to $1.14 trillion, prime money market fund assets increased by $7.11 billion to $372.92 billion, and tax-exempt fund assets decreased by $2.04 billion to $97.11 billion." Retail assets account for over a third of total assets, or 34.6%, and Government Retail assets make up 70.9% of all Retail MMFs.
They add, "Assets of institutional money market funds increased by $25.85 billion to $3.06 trillion. Among institutional funds, government money market fund assets increased by $27.99 billion to $2.81 trillion, prime money market fund assets decreased by $966 million to $236.40 billion, and tax-exempt fund assets decreased by $1.17 billion to $11.29 billion." Institutional assets accounted for 65.4% of all MMF assets, with Government Institutional assets making up 91.9% of all Institutional MMF totals.
For the month of November (through 11/30), MMF assets increased by $45.5 billion to $5.100 trillion according to Crane Data's Money Fund Intelligence XLS, which tracks a broader universe of funds than ICI. Crane Data's Prime asset totals, which broke the $1.0 trillion level three weeks ago, increased $34.4 billion last month to $1.030 trillion. Given that November and December are the two strongest months of the year seasonally, we expect even bigger inflows in December. (Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're over $400 billion lower than Crane's asset series.) According to MFI Daily, our Crane 100 Money Fund Index rose by 70 bps in November to 3.59%, while our broader Crane Money Fund Average rose by 68 bps to 3.46%.
In other news, we reviewed the new Circle Reserve Fund from BlackRock in yesterday's News, and mentioned The Wall Street Journal's story, "Rising Tether Loans Add Risk to Stablecoin, Crypto World." Today, we examine this article in more detail. The Journal writes, "The company behind the tether stablecoin has increasingly been lending its own coins to customers rather than selling them for hard currency upfront. The shift adds to risks that the company may not have enough liquid assets to pay redemptions in a crisis."
They explain, "Tether Holdings Ltd. says it lends only to eligible customers and requires that borrowers post lots of 'extremely liquid' collateral, which could be sold for dollars if borrowers default. These loans have appeared for several quarters in the financial reports that Tether shows on its website. In the most recent report, they reached $6.1 billion as of Sept. 30, or 9% of the company's total assets. They were $4.1 billion, or 5% of total assets, at the end of 2021."
The piece tells us, "Tether calls them 'secured loans' and discloses little about the borrowers or the collateral accepted. Alex Welch, a Tether spokeswoman, confirmed that all of the secured loans listed in the reports were issued and denominated in tether. The company said the loans were short-term and that Tether holds the collateral.'"
It adds, "The rise in Tether's lending represents a broad risk to the crypto world. Stablecoins such as tether are anchors in the system. They are vital for trading many cryptocurrencies and are widely held by traders. The premise of tether -- and other stablecoins -- is that the issuer always will redeem one coin for $1. Issuers take pains to demonstrate they have ample funds available to do so. The company's reports show only U.S. dollar amounts for the loans and don't say the loans were made in tether tokens. The reports also say the loans were 'fully collateralized by liquid assets.'"
They quote our Peter Crane, "I've been very skeptical and in disbelief that they can get away with the lack of disclosure and with the limited transparency.... If you do have reserves, why wouldn't you show them?"
