Money Fund Yields Poised to Hit 4.0%
Money fund yields continued their march higher last week, with our Crane 100 Money Fund Index (7-Day Yield) increasing 16 basis points to 3.79% for the week ended Friday, 12/16. Yields rose by 3 basis points the previous week and are up from 3.59% on Nov. 30, up from 2.88% on Oct. 31 and up from 2.66% on Sept. 30. Yields should keep rising and approach 4.0% by year end, as they digest last Wednesday's 50 bps Fed hike. The top-yielding money market funds have broken above 4.20% and should move towards 4.50% in coming weeks. (See our "Highest-Yielding Money Funds" table above). The Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 677), shows a 7-day yield of 3.68%, up 15 bps in the week through Friday. Prime Inst MFs were up 14 bps to 3.92% in the latest week. Government Inst MFs rose by 16 bps to 3.71%. Treasury Inst MFs up 14 bps for the week at 3.69%. Treasury Retail MFs currently yield 3.49%, Government Retail MFs yield 3.44%, and Prime Retail MFs yield 3.77%, Tax-exempt MF 7-day yields were up at 2.60%. According to Monday's Money Fund Intelligence Daily, with data as of Friday (12/16), just 7 funds (out of 816 total) still yield between below 2.0%, with assets of $641 million, or 0.0% of total assets; 139 funds yielded between 2.00% and 2.99% with $103.8 billion, or 2.0%; 670 funds yield 3.00% or more ($5.033 trillion, or 98.0%), and 85 funds have now officially broken over the 4.0% yield barrier. Our Brokerage Sweep Intelligence Index was unchanged last week at 0.43%, but sweep rates rose two weeks ago as Fidelity increased its FDIC insured sweep rate to 1.94% from 1.57%. The latest Brokerage Sweep Intelligence, with data as of Dec. 16, shows that just 3 of 11 major brokerages still offer rates of 0.01% for balances of $100K (and lower tiers). These include: E*Trade, Merrill Lynch and Morgan Stanley.
