Money market mutual fund assets jumped to record levels on the first business day of 2023, according to our Money Fund Intelligence Daily. Crane Data shows total money fund assets rose by $34.2 billion on Tuesday (1/3/23) to an all-time high of $5.225 trillion, breaking previous record highs from early December 2022 and May 2020. Assets increased by $78.7 billion in December and by $58.3 billion in November, according to MFI Daily. (Assets have been inflated somewhat by the addition in November of Circle Reserve Fund, USDXX, which has quickly grown to $23.7 billion.) ICI will release its latest weekly asset totals later Thursday (so watch for more News on this tomorrow), and Crane Data will release its monthly MFI XLS totals on Monday, Jan. 9.

In other news, Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Wednesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of Dec. 30) includes Holdings information from 40 money funds (down 14 from two weeks ago), which represent $1.063 trillion (down from $1.702 trillion) of the $5.191 trillion (20.5%) in total money fund assets tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website.)

Our latest Weekly MFPH Composition summary again shows Government assets dominating the holdings list with Repurchase Agreements (Repo) totaling $698.5 billion (down from $1.026 trillion two weeks ago), or 65.7%; Treasuries totaling $252.4 billion (down from $461.7 billion two weeks ago), or 23.8%, and Government Agency securities totaling $67.8 billion (down from $97.0 billion), or 6.4%. Commercial Paper (CP) totaled $21.3 billion (down from two weeks ago at $50.4 billion), or 2.0%. Certificates of Deposit (CDs) totaled $6.5 billion (down from $22.8 billion two weeks ago), or 0.6%. The Other category accounted for $11.3 billion or 1.1%, while VRDNs accounted for $4.9 billion, or 0.5%.

The Ten Largest Issuers in our Weekly Holdings product include: the Federal Reserve Bank of New York with $505.0 billion (47.5%), the US Treasury with $252.4 billion (23.8% of total holdings), Fixed Income Clearing Corp with $46.0B (4.3%), Federal Home Loan Bank with $34.0B (3.2%), Federal Farm Credit Bank with $31.1B (2.9%), JP Morgan with $25.8B (2.4%), RBC with $17.0B (1.6%), Nomura with $12.3B (1.2%), Mitsubishi UFJ Financial Group Inc with $10.1B (1.0%) and BNP Paribas with $9.4B (0.9%).

The Ten Largest Funds tracked in our latest Weekly include: Morgan Stanley Inst Liq Govt ($133.0B), Dreyfus Govt Cash Mgmt ($132.7B), Allspring Govt MM ($98.1B), Invesco Govt & Agency ($86.4B), State Street Inst US Govt ($78.4B), First American Govt Oblg ($68.4B), Morgan Stanley Inst Liq Treas Sec ($51.5B), Dreyfus Treas Obligations Cash Mgmt ($46.6B), Invesco Treasury Portfolio ($44.1B) and Dreyfus Treas Sec Cash Mg ($43.7B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)

Finally, the Federal Reserve released its "Minutes of the Federal Open Market Committee, December 13-14, 2022," yesterday, which contained some brief comments on money markets and money funds. They say, "The manager pro tem turned next to a discussion of operations and money markets and assessed that balance sheet runoff was proceeding smoothly. Repurchase agreement (repo) rates firmed modestly relative to the overnight reverse repurchase agreement (ON RRP) facility rate over the period with balance sheet reduction reportedly contributing, in part, to an increase in the demand for financing of Treasury securities. ON RRP balances declined, on net, as money market funds shifted investments out of the ON RRP facility, reportedly in favor of higher rates available in repo markets."

The Minutes state, "In recent months, banks continued to increase their use of wholesale funding. In addition, survey information suggested that banks expected to move deposit rates modestly higher relative to the target range in coming months. Over time, greater competition among banks for funding could contribute to drawdowns in the ON RRP facility. Staff indicated that they would continue to monitor money market conditions closely as balance sheet reduction proceeds."

They continue, "Looking ahead to year end, market participants anticipated limited pressures. The manager pro tem noted that if transitory pressures emerged in money markets, the Federal Reserve's backstop facilities are available to support effective policy implementation and smooth market functioning."

Finally, the Fed adds, "Conditions in short-term funding markets remained stable over the intermeeting period, with the November increase in the target range for the federal funds rate and the associated increases in the Federal Reserve's administered rates passing through quickly to overnight money market rates. In secured markets, repo rates were below the ON RRP offering rate less frequently than in the previous intermeeting period. Daily take-up in the ON RRP facility declined modestly, consistent with the recent firming in overnight repo rates. Net yields on money market funds rose further over the intermeeting period, mostly passing through the increase in administered rates, while bank deposit rates increased only slightly in October and November."

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