FT on MMF Inflows, Deposit Flight
"Money market funds swell by more than $286bn amid deposit flight" says an article in the Financial Times. They write, "Goldman Sachs, JPMorgan Chase and Fidelity are the biggest winners from investors pouring cash into US money market funds over the past two weeks, as the collapse of two regional US banks and the rescue deal for Credit Suisse raised concerns about the safety of bank deposits. More than $286bn has flooded into money market funds so far in March, making it the biggest month of inflows since the depths of the Covid-19 crisis, according to data provider EPFR. Goldman's US money funds have taken in nearly $52bn, a 13% increase, since March 9, the day before Silicon Valley Bank was taken over by US authorities. JPMorgan's funds received nearly $46bn and Fidelity recorded inflows of almost $37bn, according to iMoneyNet data as of Friday morning." The piece tells us, "The pace of inflows has accelerated in the past fortnight, particularly from large depositors looking for safe havens. While US officials agreed to backstop all of the deposits at SVB and Signature Bank, which failed the same weekend, they have not guaranteed those above $250,000 at other institutions.... The surge in flows this month helped push overall assets in money funds to a record $5.1tn on Wednesday, according to research from Bank of America. Data from the Investment Company Institute shows the money is flowing specifically into funds that hold US government debt, which are considered the safest destinations. So-called prime funds, which hold bank debt and corporate paper, have had small outflows.... Federal Reserve data released on Friday showed bank deposits declined in the week through March 15, from $17.6tn to $17.5tn, and deposits at small banks declined from $5.6tn to $5.4tn." The FT quotes Vanguard's Sara Devereux, "Money market funds have seen remarkable flows in recent weeks, with the largest flows into government money market funds. Part of that is because of a flight to quality after the scare with bank closures, but it's also because yields for money markets are currently very attractive."
