Daily Links Archives: August, 2022

The European Central Bank posted a release entitled, "Euro area investment fund statistics: second quarter of 2022," which tells us, "In second quarter of 2022, outstanding amount of shares/units issued by investment funds other than money market funds fell to €14,823 billion, down €1,022 billion on previous quarter. Net redemptions in quarter amounted to €77 billion, with €1,064 billion in gross issues and €1,141 billion in gross redemptions. Outstanding amount of shares/units issued by money market funds rose to €1,363 billion, up €22 billion on previous quarter." The ECB states, "For shares/units issued by money market funds the outstanding amount was €22 billion higher than in the first quarter. This increase was accounted for by €26 billion in other changes (including price changes) and €4 billion in net redemptions of shares/units. The annual growth rate of shares/units issued by money market funds, calculated on the basis of transactions, was -2.8% in the second quarter of 2022." The release also comments, "Within the assets of money market funds, the annual growth rate of debt securities holdings was -8.1% in the second quarter of 2022, with overall net sales amounting to €33 billion, which reflected net sales of €23 billion in debt securities issued by non-euro area residents and net sales of €10 billion in debt securities issued by euro area residents. For deposits and loan claims, the annual growth rate was 13.6% and transactions during the second quarter of 2022 amounted to €23 billion." See also the ECB's "Euro money market statistics: Fourth maintenance period 2022." (Note: For more statistics and information about European money market funds, join us at our upcoming European Money Fund Symposium, which is Sept. 27-28 in Paris, France.)

The Wall Street Journal is the latest puhlication to question the safety of stablecoins in "Tether Says Audit Is Still Months Away as Crypto Market Falters." They write, "This year's slump in digital assets is pressuring crypto companies to show investors that their money is safe. So far, they haven't delivered. Many crypto companies lack the basic financial guardrails that help protect investors in traditional banks. Firms often don't publish financial statements, or have anyone check their books. Even if they are audited, there are no agreed accounting standards for digital assets." The Journal explains, "Take Tether, the company behind the world's largest stablecoin. In recent months, it launched a marketing blitz of blogs and press releases, touting its transparency, after a series of crypto firm failures rattled investor confidence in it. Tether is designed to grease the rails of the roughly $1 trillion cryptocurrency market by promising each token can be redeemed for $1. Market observers have long questioned whether the firm's reserves are sufficient and have been demanding audited information." They add, "The company has been promising an audit since at least 2017. An audit is 'likely months' away, said Paolo Ardoino, chief technology officer of Tether Holdings which issues the tether coin that recently carried a market value o $68 billion. 'Things are going slower than ... we would like,' Mr. Ardoino said. Instead of a full audit, Tether, like other leading stablecoins, publishes an 'attestation' showing a snapshot of its reserves and liabilities, signed off by its accounting firm. Audits are typically more thorough than other types of attestation. The attestations for some crypto companies sign off on the numbers provided by the company's management for a specific date and time without testing the transactions before or after that date. That process can make the reports more vulnerable to being used to paint an unduly rosy picture. A 2017 attestation of Tether was skewed by its sister company, Bitfinex, transferring $382 million to its bank account, hours before the accountants checked the numbers, the Commodity Futures Trading Commission said last year. Tether settled the case with the U.S. regulator without admitting or denying the allegations."

Last week, we wrote on the release of the European Fund and Asset Management Association's "2022 Fact Book, which "provides an in-depth analysis of trends in the European fund industry." Today, we quote from a sidebar on "The rise of China in the worldwide investment fund market." (See our Aug. 24 News "EFAMA Fact Book Reviews European Funds in '​21; Money Fund Highlights," and Aug. 25 News, "More EFAMA Fact Book: Govt Debt Thin in Europe; OFR on Repo Market," and learn more at our upcoming European Money Fund Symposium, Sept. 27-28 in Paris, France.) EFAMA writes, "The fund industry has only existed for 20 years in China, yet it has made remarkable advances. China's regulated open-end fund assets amounted to EUR 3.1 trillion at the end of 2021. At the global level, the United States is the largest fund domicile, followed by Luxembourg, Ireland and China.... In general, equity funds are typically the dominant investment in large markets, such as the US, Europe and Japan. This was also true in China, where equity funds accounted for 54% of total fund assets in 2011. However, from 2013-2018, the share of equity funds decreased from 39% to 7%, whereas money market funds (MMFs) increased from 27% to 63% in 2013-2018." They tell us, "The success of MMFs was driven by the fast-growing Fintech payment platform, Alipay. In 2013, Tianhong FMC -- in collaboration with Alipay backed by Ant Group, which is affiliated with Alibaba -- launched China's first online MMF, Yu'ebao. This allows investors to buy funds products online and compare products more effectively. Yu'ebao was a great success and became the biggest MMF in the world." EFAMA adds, "Between 2018-2021, the share of MMFs fell to 42%, essentially for the benefit of multi-asset funds. The change of product structure happened for four main reasons. First, more than 300 equity funds were transformed into multi-asset funds in 2015. Second, the Chinese stock market turbulence of June 2015 led retail investors to seek less-risky assets. Third, the Chinese government recognised that the MMF sector was 'systemically important' to the country's economy. This led regulators to launch a set of new rules in 2017, aimed at strengthening the supervision of China's MMFs. In response to these regulations, Yu'ebao tried to actively limit its size by imposing a subscription limit in 2018. In April 2021, China's central bank urged Yu'ebao to reduce its size to avoid liquidity risk. This explains why the share of Chinese MMFs fell to 46% in 2020 and continued to decline during 2021. Last, the share of equity funds has increased from 7% to 12% in 2018-2021, due to the regulatory guideline of 'continuously increasing the share of equity funds' and the rising A-share market in 2019."

Prime Retail money market funds, which have been increasing strongly in recent months, accounted for almost all of the overall MMF asset increase in the latest week ($7.8 billion of the total $8.1 billion). The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows assets rising after falling for 3 weeks in a row. Year-to-date, MMFs are down by $135 billion, or -2.9%, with Institutional MMFs down $155 billion, or -4.8% and Retail MMFs up $20 billion, or 1.4%. Over the past 52 weeks, money fund assets are up by $43 billion, or 1.0%, with Retail MMFs rising by $63 billion (4.4%) and Inst MMFs falling by $20 billion (-0.6%). (For the month of August through 8/24, MMF assets have increased by $34.9 billion to $5.032 trillion according to Crane's MFI XLS, which tracks a broader universe of funds than ICI.) ICI's weekly release says, "Total money market fund assets increased by $8.08 billion to $4.57 trillion for the week ended Wednesday, August 24, the Investment Company Institute reported today. Among taxable money market funds, government funds decreased by $925 million and prime funds increased by $7.63 billion. Tax-exempt money market funds increased by $1.37 billion." ICI's stats show Institutional MMFs increasing $2.7 billion and Retail MMFs increasing $5.4 billion in the latest week. Total Government MMF assets, including Treasury funds, were $3.971 trillion (86.9% of all money funds), while Total Prime MMFs were $498.4 billion (10.9%). Tax Exempt MMFs totaled $100.5 billion (2.2%). ICI explains, "Assets of retail money market funds increased by $5.40 billion to $1.49 trillion. Among retail funds, government money market fund assets decreased by $3.57 billion to $1.13 trillion, prime money market fund assets increased by $7.84 billion to $269.01 billion, and tax-exempt fund assets increased by $1.14 billion to $89.92 billion." Retail assets account for just under a third of total assets, or 32.6%, and Government Retail assets make up 75.9% of all Retail MMFs. They add, "Assets of institutional money market funds increased by $2.68 billion to $3.08 trillion. Among institutional funds, government money market fund assets increased by $2.65 billion to $2.84 trillion, prime money market fund assets decreased by $208 million to $229.33 billion, and tax-exempt fund assets increased by $239 million to $10.58 billion." Institutional assets accounted for 67.4% of all MMF assets, with Government Institutional assets making up 92.2% of all Institutional MMF totals. (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.)

Crane Data is starting to make plans for our next Money Fund University educational conference. (We're also gearing up for our upcoming, European Money Fund Symposium, which is Sept. 27-28 in Paris, France.) Our 12th annual MFU will change slightly from its previous "basic training" format to a more advanced "Master's in Money Markets" program this year. It will take place at the Hyatt Regency in Boston, Mass., December 15-16, 2022. (We cancelled MFU last January and hosted a virtual event, but this year we'll be back live and in person.) Crane's Money Fund University is designed for those relatively new to the money market fund industry or those in need of a concentrated refresher on a broad core curriculum. The event also focuses on hot topics like money market fund regulations, money fund alternatives, offshore markets, and other recent industry trends. Our educational conference features a faculty of the money fund industry's top lawyers, strategists, and portfolio managers, and the Boston show will include an extended free training session (and lunch) for Crane Data clients, as well as a Holiday party where all are welcome. Money Fund University offers a 2-day crash course on money market mutual funds, educating attendees on the history of money funds, the Fed, interest rates, ratings, rankings, and money market instruments such as commercial paper, Treasury bills, CDs and repo. We also cover portfolio construction and credit analysis. Registrations ($750) are now being taken, and the latest agenda is available here. (E-mail us to request the latest brochure.) New portfolio managers, analysts, investors, issuers, service providers, and anyone interested in expanding their knowledge of "cash" investing should benefit from our comprehensive program. Even experienced professionals may enjoy a refresher course and the opportunity to interact with peers in an informal setting. Also, please join us for the 8th Annual Crane's European Money Fund Symposium. The latest agenda is available and registrations are still being taken for this year's European event, which will take place Sept. 27-28 at the Renaissance Paris La Defense in Paris, France. Registration for our 2022 Crane's European Money Fund Symposium is $1,000 USD. Please make your hotel reservations soon! Rooms must be booked before August 5 to receive the discounted rate of E259. Visit www.euromfs.com to register, and contact us to request the PDF brochure. (Let us know too if you'd like information on speaking or sponsorship pricing.) Mark your calendars for our next Bond Fund Symposium, which be held in Boston, Mass., on March 23-24, 2023. (Click here to see last year's agenda.) Bond Fund Symposium is the only conference devoted entirely to bond mutual funds, bringing together bond fund managers, marketers, and professionals with fixed-income issuers, investors and service providers. The majority of the content is aimed at the growing ultra-short and conservative ultra-short bond fund marketplace. Finally, mark your calendars too for our next big show, Crane's Money Fund Symposium, which will be held in Atlanta, Ga., June 21-23, 2023. Money Fund Symposium attracts money fund managers, marketers and servicers, cash investors, money market securities dealers, issuers, and regulators for 2 1/2 days of sessions, socializing and networking. Let us know if you'd like more details on any of our events, and we hope to see you in Paris in September, Boston in December or in March 2023, and Atlanta in June 2023. Thanks to all of our speakers, sponsors and supporters for your patience and support over the past 2+ rough years!

Barron's is the latest news source to write about the suspicious disclosure practices of the largest stablecoin in, "Tether Is Working to Be More Transparent. But the Crypto Issuer Is Still Falling Short." They write, "Tether, the largest issuer of cryptocurrency stablecoins, has hired a major accounting firm to review its quarterly reserve reports in a push for transparency. The move comes as Tether faces competitive threats from rival Circle. Tether is working with the Italian arm of BDO, the fifth largest public accounting firm by revenue, the issuer said. BDO Italia released an assurance report on Tether's reserves on Friday and the issuer said it was moving toward monthly assurance reports. Two accounting firms in the Cayman Islands had conducted Tether's assurance reports." The piece explains, "More than 90% of all crypto-trading volume is in stablecoins, according to CoinMarketCap, and Tether is the third-largest digital token after Bitcoin and Ether. USD Coin <b:>~_, or USDC, which is issued by Circle, is ranked fourth. Stablecoins, such as USDT and USDC, are backed by assets, with their issuers claiming each token is backed 1:1 with the dollar. `The quality and transparency of the issuers' reserves have come under intense scrutiny as crypto regulation develops." Barron's adds, "Trust has become more important in the past few months as competition heats up in the stablecoin space, especially between USDT and USDC after Tether briefly lost its peg in the secondary market during trading turmoil in May. The token's market capitalization, which matches the number of USDT tokens in circulation, dropped by $17 billion from early May to early July -- to $66 billion from $83 billion. USDC's market cap jumped by more than $10 billion over the same period, to $56 billion from $46 billion."

MarketWatch writes, "Once offering the worst return on Wall Street, cash is now looking like the best asset to own, says Morgan Stanley." The article says, "Stock sellers are picking up where they left off on Friday, as the market appears to be waking up from its August slumber with a vengeance.... That brings us to our call of the day from Morgan Stanley strategist Andrew Sheets who says investors should consider cash as a viable investment strategy, even if that hasn't seemed like such a winning proposal in the past. 'Holding cash ... was an explicitly defensive decision for much of the last 12 years. Of course it offered a worse return than anything else in the market,' Sheets told clients in the bank's Sunday note." "But the idea that holding cash means paying for insurance is no longer accurate," said Sheets, who notes that U.S. 6-month Treasury bills yields (3.1%) are the highest since late 2007, offering 157 basis points more than S&P 500 dividends, 21 basis points more than 10-year Treasurys, and just 60 basis points under the U.S. aggregate bond index AGG." "For USD investors, cash has ceased to be a material drag on a portfolio's current yield," he said. Even holding cash in Europe, which used to be extremely costly, is no longer, as German 6-month bill yields are positive for the first time since 2014." MarketWatch comments, "Streets said that on a cross-asset basis, U.S. dollar cash offers a high current yield, liquidity, and a better 12-month total return than Morgan Stanley's own implied forecasts for U.S. equity, U.S. Treasurys, investment grade and high yield credit -- 'with considerably less volatility.'" The brief adds, "This is why Morgan Stanley's core optimized fixed-income portfolios are overweight short-dated fixed income, he said. Against other currencies the dollar also holds up, and the bank's foreign exchange experts see more of that strength ahead, especially against the euro, which was once again tapping parity on Monday as worries over Europe winter fuel shortages build."

This weekend's Barron's features a "Where to Stash Cash" brief, entitled, "Be Like Buffett and Buy T-Bills." The piece says, "Warren Buffett parks most of Berkshire Hathaway’s cash in ultrasafe U.S. Treasury bills, and individual investors may want to consider following Buffett's lead now that the yields are as high as 3%. Treasury bills, which are U.S. government securities maturing in less than a year, are a good alternative to money-market funds and bank certificates of deposits. Interest is exempt from state and local taxes, unlike CDs. Investors can buy them through the government's TreasuryDirect program or through banks and brokers." Barron's adds, "Buffett, the longtime CEO of Berkshire Hathaway, prefers T-bills to other short-term debt such as commercial paper (a corporate IOU) because he never wants to worry about the safety of Berkshire's cash trove, which totaled $105 billion on June 30. T-Bills are sold with maturities of three, six, and 12 months as well as four and eight weeks. The three-month bill now yields 2.5%; the six-month bill, 3.05%; and the one-year bill, 3.2%, according to Bloomberg. Yields have risen from just above zero a year ago ... with the key Federal fund rate now at 2.25% to 2.5%. Another way to get exposure to T-bills is through exchange-traded funds like the $20 billion iShares Short Treasury Bond ETF (SHV), now yielding 2.1%. It has an average maturity of about four months and holds U.S. Treasuries maturing in a year or less. For more yield, and a little rate risk, there's the iShares 1-3 Treasury Bond ETF (SHY), now yielding close to 3% with an average maturity of about two years." Also, The Wall Street Journal's "Heard on the Street" column writes, "Dry Powder Key to Silicon Valley Bank Rebound." They tell readers, "SVB Financial Group, parent of Silicon Valley Bank, has been at the heart of the venture-capital industry for many years. A lot of young technology and life-science companies deposit the venture money they raise into the bank, and venture-capital firms borrow from the bank before drawing down on their limited partners’ commitments.... As for deposits, SVB has sources of funding to draw on to sustain asset growth. Over $190 billion of client money as of the end of June was held off balance sheet in vehicles such as money-market funds. Clients might expect to be compensated with higher rates to move it back into deposits -- but that is still better than the alternative of needing to slow balance-sheet growth, which some banks might face."

The Federal Reserve's latest "Minutes of the Federal Open Market Committee" tells us, "The deputy manager next turned to a discussion of money markets and Desk operations. The 75 basis point increase in the target range at the June meeting passed through fully to the federal funds rate and other overnight rates. Although downward pressure on overnight secured rates had persisted, the pronounced softness observed in the past intermeeting period had abated to some degree. The overnight reverse repurchase agreement (ON RRP) facility continued to support policy implementation, and balances remained elevated. The deputy manager anticipated that, in the near term, the evolution of take-up at the ON RRP facility would continue to depend on changes in the supply of safe, short-term investments, and the demand for such investments by money market mutual funds (MMMFs). ON RRP balances were expected to decline over time as balance sheet runoff proceeded. The deputy manager noted that this process would involve adjustments across a number of markets and that the staff would continue to monitor developments in money markets closely." The Minutes explain, "Conditions in short-term funding markets were stable since the previous FOMC meeting, with the June increase in the Federal Reserve's administered rates passing through promptly to overnight money markets. Secured overnight rates remained soft relative to the ON RRP offering rate, with the downward pressure on rates attributed to continuing declines in net Treasury bill issuance, elevated demand for collateral in the form of Treasury securities, and MMMFs maintaining very short portfolio maturities amid uncertainty about the near-term outlook for policy rate increases. Consistent with the downward pressure on repo rates, daily take-up in the ON RRP facility increased. Spreads on lower-rated short-term commercial paper (CP) narrowed modestly, on net. Bank core deposit rates moved up very little in response to the Federal Reserve's increase in administered rates following the June FOMC meeting, while MMMFs' net yields rose, reflecting the increases in short-term rates over recent months." They add, "Yields offered by MMMFs were well above those offered by banks, and the staff noted that this yield differential would attract inflows to MMMFs. Noting the structural vulnerabilities associated with MMMFs, the staff highlighted the need to monitor the size and fragility of this sector and the progress of the Security and Exchange Commission's recently proposed reforms. The staff noted that open-end bond and loan mutual funds, which are also vulnerable to large-scale investor withdrawals, had experienced outflows as interest rates rose. These outflows had proceeded in an orderly manner."

Asian news source Hubbis tells us, "HSBC Asset Management Launches RMB Money Market Fund." They write, "HSBC Asset Management has announced the launch of HSBC Global Money Funds – Renminbi ... for Hong Kong investors. The Fund aims to preserve capital and provide daily liquidity together with an investment return that is comparable to normal money market rate by investing in a diversified portfolio of short-term RMB-denominated instruments." The brief, which may or may not be a press release, explains, "International usage of the RMB has been on the rise in the last decade, mainly attributable to the positive regulations and policies that connect China's markets with the rest of the world.... The Fund will invest in a diverse set of high quality money market instruments from various types of issuers, such as governments, quasi-governments, international organisations, financial institutions (including banks) and corporates, and from a mix of geographies. The Fund also has the flexibility to capture opportunities in both the onshore and offshore RMB universe." Gordon Rodrigues, CIO, Liquidity, Asia Pacific, comments, "In the last decade, RMB has come a long way as an international currency for trade, payments, and finance. It is now the world's third most used currency in trade finance and the fifth most active currency for global payments. As offshore RMB circulation continues to increase, there is a need for viable alternatives intended for institutions and individuals to manage their RMB liquidity. By using a repeatable investment process that benefits from extensive credit research and focuses on risk management, the Fund aims to help our clients preserve capital1, meet their RMB liquidity needs, and enjoy an investment return comparable to normal money market rate of RMB.... Hong Kong is the largest clearing hub for global RMB transactions outside of mainland China. As reiterated in its 14th Five Year Plan, the Chinese central government is committed to strengthening Hong Kong's role as a global offshore RMB business hub. As RMB internationalisation continues to progress forward, we believe the Fund can potentially provide a relatively lower risk and highly diversified option for investors to manage their RMB cash needs." Hubbis' piece adds, "As of 31 March 2022, HSBC AM manages USD 136 billion in money market assets across 10 currencies globally. The firm has been managing money market strategies for over three decades."

Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of Aug. 12) includes Holdings information from 63 money funds (up 8 from two weeks ago), which represent $2.135 trillion (down from $2.260 trillion) of the $5.022 trillion (42.5%) in total money fund assets tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our July 13 News, "July Portfolio Holdings: Fed Repo in MMFs Breaks $2.0 Tril; T-Bills Down," for more.) Our latest Weekly MFPH Composition summary again shows Government assets dominating the holdings list with Repurchase Agreements (Repo) totaling $1.104 trillion (down from 1.168 trillion two weeks ago), or 51.7%; Treasuries totaling $747.8 billion (down from $834.7 billion two weeks ago), or 35.0%, and Government Agency securities totaling $117.3 billion (up from $109.0 billion), or 5.5%. Commercial Paper (CP) totaled $52.1 billion (up from two weeks ago at $48.2 billion), or 2.4%. Certificates of Deposit (CDs) totaled $38.7 billion (up from $37.3 billion two weeks ago), or 1.8%. The Other category accounted for $52.8 billion or 2.5%, while VRDNs accounted for $22.9 billion, or 1.1%. The Ten Largest Issuers in our Weekly Holdings product include: the Federal Reserve Bank of New York with $834.7 billion (39.1%), the US Treasury with $747.8 billion (35.0% of total holdings), Federal Home Loan Bank with $70.2B (3.3%), Federal Farm Credit Bank with $42.1B (2.0%), Fixed Income Clearing Corp with $34.5B (1.6%), BNP Paribas with $27.1B (1.3%), RBC with $25.1B (1.2%), Barclays PLC with $19.0B (0.9%), JP Morgan with $18.9B (0.9%) and Mitsubishi UFJ Financial Group Inc with $15.1B (0.7%). The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($232.2B), BlackRock Lq FedFund ($153.6B), Morgan Stanley Inst Liq Govt ($150.9B), BlackRock Lq Treas Tr ($124.0B), Fidelity Inv MM: Govt Port ($121.2B), Dreyfus Govt Cash Mgmt ($117.0B), Allspring Govt MM ($107.7B), State Street Inst US Govt ($107.4B) BlackRock Lq T-Fund ($100.1B) and JPMorgan 100% US Treas MMkt ($88.2B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary, or our Bond Fund Portfolio Holdings data series.)

The Wall Street Journal writes, "Robinhood Learns to Nab Interest Income." The article states, "Though customer trading remains the bulk of Robinhood's revenue, the upswing in interest rates is helping show some progress on what the firm can do while many small traders are on the sidelines. Interest earned on corporate cash and investments and segregated customer cash and securities went from $2 million in the first quarter to $16 million. Margin interest revenue also rose sequentially, even as balances dipped lower. Securities lending income didn't rise, but the company just began rolling out its expanded program for customers to earn from lending out their stock." It continues, "A big asset for the company is its cash pile. Robinhood said that interest-earning assets were $16 billion at the end of the second quarter. That cash hoard is partly a legacy of the time when Robinhood had to scramble to meet its obligations in early 2021 during the meme-stock surge. But the company says it now uses very little of its corporate cash to run the business on a typical day. It has also swept up a balance of over $2 billion in customer cash as of the second quarter. Robinhood estimated it is realizing about $40 million of additional annualized revenue for every quarter-point increase in interest rates by the Federal Reserve." The Journal brief adds, "Higher rates are also giving Robinhood the opportunity to retain and attract customer cash. Even though net cumulative funded accounts grew just slightly sequentially, to 22.9 million, net deposits grew at a 22% annualized rate over the second quarter. Cash sorting among brokerage customers who are seeking out the highest rate can be a risk and drive up funding costs -- but it is also an opportunity for the likes of Robinhood to gather cash by offering attractive rates, shifting more of its business away from dependence on high trading levels."

A Bloomberg article, "Tether Says There Is No Chinese Commercial Paper Among Its Reserves," tells us, "Tether said the reserves backing its $66 billion stablecoin do not contain any Chinese commercial paper, likely marking the first time that the issuer of the world's most used cryptocurrency explicitly stated it doesn't hold the controversial assets. Tether Holdings Ltd., which issues and operates the US dollar-pegged token USDT, had most recently refuted speculation that its token was 85% backed by Chinese or Asian commercial paper in June. It has been steadily decreasing its exposure to commercial paper in favor of holding US Treasury bills, with a goal of reducing its paper holdings to zero by early November." An indignant blog post by Tether, "Tether Combats False Information to Preserve the Reputation of the Cryptocurrency Ecosystem," claims, "The spreading of false information is the biggest threat to the cryptocurrency industry that currently exists. It is a threat of the same concern as scams, hacks or cyberattacks because the spreading of false information risks not only the reputation of the industry but also each and every member of the community. With that in mind, Tether would like to again reiterate to naysayers who continue to spread falsities about its commercial paper holdings, that you are wrong. Plain and simple. Tether's portfolio holds no Chinese commercial paper and as of today, its total commercial paper exposure has been reduced yet again to a mere ~3.7B (from 30B in July 2021) with plans to further decrease to ~200M by the end of August 2022 and to zero by end of October/early November 2022. Tether continues to ensure that it has a diversified portfolio with limits to exposure on individual issuers or assets. Its reduction in commercial paper is a commitment to its community. Tether is determined to lead the stablecoin market through the next wave of adoption and it will do so proudly regardless of critics and rumors." The mystery continues though why Tether won't just disclose its holdings. See here for the latest disclosures on "Transparency".

The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows assets falling for the second week in a row after 4 straight weeks of gains in July. Year-to-date, MMFs are down by $138 billion, or -2.9%, with Institutional MMFs down $146 billion, or -4.5% and Retail MMFs up $9 billion, or 0.6%. Over the past 52 weeks, money fund assets are up by $58 billion, or 1.3%, with Retail MMFs rising by $51 billion (3.6%) and Inst MMFs rising by $7 billion (0.2%). (For the month of August, MMF assets increased by $28.0 billion to $5.025 trillion according to Crane's MFI XLS, which tracks a broader universe of funds than ICI.) ICI's weekly release says, "Total money market fund assets decreased by $8.01 billion to $4.57 trillion for the week ended Wednesday, August 10, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $17.81 billion and prime funds increased by $9.83 billion. Tax-exempt money market funds decreased by $31 million." ICI's stats show Institutional MMFs decreasing $10.7 billion and Retail MMFs increasing $2.7 billion in the latest week. Total Government MMF assets, including Treasury funds, were $3.990 trillion (87.4% of all money funds), while Total Prime MMFs were $480.8 billion (10.5%). Tax Exempt MMFs totaled $96.7 billion (2.1%). ICI explains, "Assets of retail money market funds increased by $2.70 billion to $1.48 trillion. Among retail funds, government money market fund assets decreased by $4.21 billion to $1.14 trillion, prime money market fund assets increased by $6.65 billion to $254.00 billion, and tax-exempt fund assets increased by $261 million to $87.35 billion." Retail assets account for just under a third of total assets, or 32.3%, and Government Retail assets make up 76.9% of all Retail MMFs. They add, "Assets of institutional money market funds decreased by $10.71 billion to $3.09 trillion. Among institutional funds, government money market fund assets decreased by $13.60 billion to $2.85 trillion, prime money market fund assets increased by $3.18 billion to $226.78 billion, and tax-exempt fund assets decreased by $292 million to $9.33 billion." Institutional assets accounted for 67.7% of all MMF assets, with Government Institutional assets making up 92.4% of all Institutional MMF totals. (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.)

As a reminder, if you plan on attending our upcoming European Money Fund Symposium, Sept. 27-28 in Paris, France, please make your hotel reservations ASAP! The latest European MFS agenda is available (though it's being tweaked) and registrations are still being taken for this year's "offshore" event. We provide more details on this, and our other upcoming conferences, below, and please contact Pete for more information. European Money Fund Symposium offers European, global and "offshore" money market portfolio managers, investors, issuers, dealers and service providers a concentrated and affordable educational experience, and an excellent and informal networking venue. Registration for European Money Fund Symposium is $1,000 USD. EMFS will be held at the The Renaissance Paris La Defense. Hotel rooms must be booked before August 12 to receive the discounted rate of E259. Visit www.euromfs.com to register, and contact us to request the PDF brochure. (Let us know too if you'd like information on speaking or sponsorship pricing too.) Also, mark your calendars for our next Crane's Money Fund University, which will be held in Boston, Mass., Dec. 15-16, 2022, and our next Bond Fund Symposium will also be held in Boston, Mass., March 23-24, 2023. Finally, mark your calendars too for next year's Money Fund Symposium, which is scheduled for June 21-23, 2023, in Atlanta, Ga. Let us know if you'd like more details on any of our events, and we hope to see you in Paris next month.

A story entitled, "Trust Asset Management to launch a money market fund," posted on Indian website LiveMint, explains, "Trust Asset Management has announced the launch of its new fund offer (NFO), TrustMF Money Market Fund, which aims to benefit from the steepness in the money market yield curve and provides an avenue for parking short-term surplus with relatively low-interest rate risk." It explains, "The NFO for the open-ended debt scheme investing in money market securities will open for subscription on 5 August and close on 11 August. The scheme will be managed by Anand Nevatia, fund manager, Trust Mutual Fund. This is the fifth addition to Trust Mutual Fund's fixed income product portfolio." Trust Mutual Fund CEO Sandeep Bagla comments, "We continue to focus on our key ethos of providing credible investment solutions to our investors. The aim of the fund is to take advantage of the money market yield curve, which has seen perennial steepness. In these uncertain times, money market mutual funds will provide relative stability and reasonable returns to investors looking to park their surplus money for three to six months investment horizon." They also quote Anand Nevatia of the TRUST Mutual Fund, "The change in stance from RBI (Reserve Bank of India) followed by a series of rate hikes, has resulted in abnormal steepness in the money market yield curve, particularly in overnight to six-month curve." The brief adds, "The TrustMF Money Market Fund will look to invest predominantly in six months instruments of high quality issuers and let them roll down to take benefit of the steepness."

Money fund yields jumped again the week after the Fed's 75 bps hike on July 27. Our Crane 100 Money Fund Index (7-Day Yield) rose 33 basis points to 1.89% the week ended Friday, 8/5. Yields rose by 23 basis points the previous week and 6 basis points the week before that. On average, they're up from 1.57% on July 29, up from 1.18% on June 30 and more than triple their level of 0.58% on May 31. MMF yields are up from 0.21% on April 29, 0.15% on March 31 and 0.02% on February 28 (where they'd been for almost 2 years prior). Yields should keep inching higher and should approach 2.0% on average in coming days. Our broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 671), shows a 7-day yield of 1.75%, also up 26 bps in the week through Friday. The Crane Money Fund Average is up 72 bps since beginning of July and up 128 bps from 0.47% at the beginning of June. Prime Inst MFs were up 39 bps to 2.03% in the latest week, up 76 bps since the start of July and up 139 bps since the start of June (close to double from the month prior). Government Inst MFs rose by 30 bps to 1.81%, they are up 71 bps since start of July and up 127 bps since the start of June. Treasury Inst MFs up 25 bps for the week at 1.76%, up 72 bps since beginning of July and up 126 bps since the beginning of June. Treasury Retail MFs currently yield 1.52%, (up 27 bps for the week, up 72 bps since July and up 122 bps since June), Government Retail MFs yield 1.48% (up 30 bps for the week, up 69 bps since July started and up 122 bps since June started), and Prime Retail MFs yield 1.85% (up 40 bps for the week, up 78 bps from beginning of July and up 137 bps from beginning of June), Tax-exempt MF 7-day yields rose by 44 bps to 1.12%, they are up 56 bps since the start of July and up 72 bps since the start of June. According to Monday's Money Fund Intelligence Daily, with data as of Friday (8/5), just 66 funds (out of 818 total) still yield between 0.00% and 0.99% with assets of $69.1 billion, or 1.4% of total assets; 230 funds yield between 1.00% and 1.49% with $366.5 billion in assets, or 7.3%; 139 funds yielded between 1.50% and 1.74% with $1.088 trillion or 21.8%; 179 funds yielded between 1.75% and 1.99% ($1.505 trillion, or 30.1%) and 204 funds yielded 2.00% or more ($1.972 trillion, or 39.4%). Brokerage sweep rates also moved higher over the past week too, as Ameriprise Financial, Fidelity, Merrill Lynch, Raymond James, RW Baird and Schwab all tweaked their rates upwards. Our latest Brokerage Sweep Intelligence shows brokerages paying an average of 0.25% on FDIC insured deposits, up from 0.16% a month ago and 0.05% two months ago. Our Crane Brokerage Sweep Index, the average rate for brokerage sweep clients (most of which are swept into FDIC insured accounts; only Fidelity sweeps to a money market fund), jumped up 7 basis points to 0.25%. This follows increases over the past couple of months but also follows 2 straight years of yields at 0.01%. Sweep yields were 0.12% on average at the end of 2019 and 0.28% on average at the end of 2018. The latest Brokerage Sweep Intelligence, with data as of Aug. 5, shows six changes over the previous week. BSI reports that Ameriprise Financial increased rates to 0.09% for all balances between $1K and $99K, to 0.10% for balances between $100K and $249K, to 0.14% for balances between $250K and $999K, to 0.23% for balances between $1 million and $4.9 million, and to 0.31% for balances of $5 million and over for the week ended August 5. Fidelity increased rates to 1.19% for all balances between $1K and $5 million and more. Merrill Lynch increased rates to 0.05% for balances between $1 million and $9.9 million and to 0.15% for balances over $10 million. Raymond James increased rates to 0.15% for all balances between $1K and $99K, to 0.25% for balances between $100K and $249K, to 0.70% for balances between $250K and $999K, and to 1.00% for balances between $1 million and $5 million. The two other changes came from RW Baird and Schwab, RW Baird increased rates to 0.69% for balances between $1K and $249K, to 0.79% for balances between $250K and $999K, to 1.04% for balances between $1 million and $1.9 million and to 1.38% for balances of $5 million and more. Schwab increased rates to 0.25% for all balances of $1k to $5 million and more. Just three 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.

J.P. Morgan Securities writes that "MMFs pass on over 70% of rate increases to shareholders," in a recent US Short Duration Update. They explain, "In one of the most aggressive tightening cycles in decades, the Fed has raised the fed funds target range by 225bp this year. As expected, MMFs have been quick to pass on the rate increases to end shareholders. As of July month-end, 7-day net yields of prime, government, and Treasury MMFs registered 1.86%, 1.56%, and 1.55%, respectively, an increase of 180bp, 154bp, and 154bp YTD." The piece tells us, "In other words, MMFs have passed on about 70-80% of the rate increases to shareholders, depending on the type of fund. Of course, this was not the case initially. The relationship between market rates and MMF net yields is much weaker when rates are near the zero lower bound due to MMF fee waivers. During the 2015-2018 tightening cycle, the first 25bp rate hike almost entirely went to expanding the expense ratios of government and prime funds as MMFs sought to recapture fee waivers. It was not until the fourth rate hike when expense ratios began to stabilize, implying a resumption of the relationship between market rates and MMF net yields." JPM comments, "Against this backdrop, the current tightening cycle has shown similarities to the last tightening cycle with respect to recouping fee waivers. Treasury and government MMFs have recouped a majority of their fee waivers imposed since the pandemic following the initial two rate hikes in March (+25bp) and May (+50bp). We estimate 82% and 96% of Treasury and government MMF fee waivers, respectively, were recouped by the time the fed funds target range was 0.75%-1.00%, while prime MMFs lagged and only recouped 46% during the same period." The update adds, "Furthermore, with expense ratios for government and Treasury MMFs now matching pre-pandemic levels, MMFs could pass along a majority of any further rate increases to shareholders, especially as we continue down this aggressive tightening path. Notably, there is a growing gap between where institutional and retail money funds are yielding. Based on 7-day yields, the spread between institutional and retail is currently around 10-20bp, versus 0-5bp at the start of this year.... This makes sense, as institutional MMFs make up over 70% of the taxable MMF universe, and MMFs are eager to attract institutional money less-loved by leverage-constrained banks.... Meanwhile, retail MMF AUMs tend to be sticky. And while online deposit rates have exhibited a much higher beta to the fed funds rate than those paid on institutional deposits and traditional retail deposits, they are still below the rates paid on retail MMFs, particularly in prime.... All told, for anyone looking to hold cash, MMFs remain an economically attractive vehicle, reform or not."

The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows assets falling in the past week after 4 straight weeks of gains in July. Year-to-date, MMFs are down by $129 billion, or -2.7%, with Institutional MMFs down $135 billion, or -4.2% and Retail MMFs up $6 billion, or 0.4%. Over the past 52 weeks, money fund assets are up by $75 billion, or 1.7%, with Retail MMFs rising by $50 billion (3.5%) and Inst MMFs rising by $26 billion (0.8%). (For the month of July, MMF assets increased by $25.3 billion to $5.013 trillion according to Crane's MFI XLS, which tracks a broader universe of funds than ICI.) ICI's weekly release says, "Total money market fund assets decreased by $14.20 billion to $4.58 trillion for the week ended Wednesday, August 3, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $17.69 billion and prime funds increased by $4.28 billion. Tax-exempt money market funds decreased by $788 million." ICI's stats show Institutional MMFs decreasing $12.0 billion and Retail MMFs decreasing $2.2 billion in the latest week. Total Government MMF assets, including Treasury funds, were $4.008 trillion (87.6% of all money funds), while Total Prime MMFs were $471.0 billion (10.3%). Tax Exempt MMFs totaled $96.7 billion (2.1%). ICI explains, "Assets of retail money market funds decreased by $2.21 billion to $1.47 trillion. Among retail funds, government money market fund assets decreased by $5.92 billion to $1.14 trillion, prime money market fund assets increased by $4.60 billion to $247.35 billion, and tax-exempt fund assets decreased by $891 million to $87.09 billion." Retail assets account for just under a third of total assets, or 32.2%, and Government Retail assets make up 77.3% of all Retail MMFs. They add, "Assets of institutional money market funds decreased by $11.98 billion to $3.10 trillion. Among institutional funds, government money market fund assets decreased by $11.77 billion to $2.87 trillion, prime money market fund assets decreased by $323 million to $223.60 billion, and tax-exempt fund assets increased by $103 million to $9.62 billion." Institutional assets accounted for 67.8% of all MMF assets, with Government Institutional assets making up 92.5% of all Institutional MMF totals. (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.)

The Association for Financial Professionals will host a webinar next Thursday, August 11 (2-3pm EDT) entitled, "2022 AFP Liquidity Survey: Short-Term Investing in Turbulent Times," which will review AFP's 2022 Liquidity Survey and recent trends in cash investing. (The webinar is free for AFP members or $100 for non-members.) AFP's introduction explains, "Join this companion webinar to the 2022 AFP Liquidity Survey underwritten by Invesco, as we highlight key survey results and discuss the current investment climate. Panelists share their insights on possible money fund reform, rising interest rates, the war in Ukraine, low unemployment, and high inflation rates -- issues we haven't had to deal with in years. Due to prevailing economic uncertainty, investing operating cash in the near term has its challenges. We highlight what corporate practitioners are doing as well as provide market insight into where there is value and opportunity out on the yield curve." The webinar's objectives include: "Learn about investing short term cash in in this unique and unprecedented economic environment, and, Benchmark and determine best practices towards investing based on survey results and from the panelists." Speakers include: AFP's Tom Hunt, Invesco's Laurie Brignac, Gilbane Building Company's John Paris, Crane Data's Pete Crane and Workiva's Hui Chen. Also, please join us for our 8th Annual Crane's European Money Fund Symposium. The latest agenda is available and registrations are still being taken for this year's European event, which will take place Sept. 27-28 at the Renaissance Paris La Defense in Paris, France. Registration for our 2022 Crane's European Money Fund Symposium is $1,000 USD. Please make your hotel reservations soon! Rooms must be booked before August 5 to receive the discounted rate of E259. Visit www.euromfs.com to register, and contact us to request the PDF brochure. (Let us know too if you'd like information on speaking or sponsorship pricing.)

Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Tuesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of July 29) includes Holdings information from 55 money funds (down 30 from a week ago), which represent $2.260 trillion (down from $2.833 trillion) of the $4.997 trillion (45.2%) in total money fund assets tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our July 13 News, "July Portfolio Holdings: Fed Repo in MMFs Breaks $2.0 Tril; T-Bills Down," for more.) Our latest Weekly MFPH Composition summary again shows Government assets dominating the holdings list with Repurchase Agreements (Repo) totaling $1.168 trillion (down from 1.470 trillion a week ago), or 51.7%; Treasuries totaling $834.7 billion (down from $996.3 billion a week ago), or 36.9%, and Government Agency securities totaling $109.0 billion (down from $151.9 billion), or 4.8%. Commercial Paper (CP) totaled $48.2 billion (down from a week ago at $66.8 billion), or 2.1%. Certificates of Deposit (CDs) totaled $37.3 billion (down from $47.1 billion a week ago), or 1.6%. The Other category accounted for $38.4 billion or 1.7%, while VRDNs accounted for $24.4 billion, or 1.1%. The Ten Largest Issuers in our Weekly Holdings product include: the Federal Reserve Bank of New York with $915.2 billion (40.5%), the US Treasury with $834.7 billion (36.9% of total holdings), Federal Home Loan Bank with $64.2B (2.8%), Federal Farm Credit Bank with $40.0B (1.8%), BNP Paribas with $38.4B (1.7%), Fixed Income Clearing Corp with $31.4B (1.4%), RBC with $27.1B (1.2%), Barclays PLC with $17.1B (0.8%), Credit Agricole with $13.5B (0.6%) and Citi with $13.5B (0.6%). The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($237.0B), Goldman Sachs FS Govt ($228.7B), Morgan Stanley Inst Liq Govt ($158.0B), BlackRock Lq FedFund ($157.3B), BlackRock Lq Treas Tr ($120.2B), Fidelity Inv MM: Govt Port ($116.5B), BlackRock Lq T-Fund ($108.1B), Allspring Govt MM ($106.7B), Goldman Sachs FS Treas Instruments ($105.7B) and State Street Inst US Govt ($98.9B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary, or our Bond Fund Portfolio Holdings data series.)

J.P. Morgan Asset Management published a press release entitled, "J.P. Morgan Asset Management Commits $1 Million to Support Economic Opportunity for Underserved Youth and Single Mothers as Part of Empowering Change Program." It explains, "J.P. Morgan Asset Management today announced a $1 million dollar commitment to support underserved students through commitments made by the Empower and Community Development Fund, a Donor-Advised Fund established by J.P. Morgan Investment Management Inc. (and administered by the Chicago Community Trust), to the United Negro College Fund (UNCF) and Youth Guidance, as well as to support single mothers through Kingsborough Community College in Brooklyn, New York and Lee College in Houston, Texas. This announcement, part of J.P. Morgan Asset Management's February 2021 commitment to make a donation of 12.5% of its annual gross revenue received from the management fees on the Empower money market share class assets to the Empower Community Development Fund, a Donor-Advised Fund that is committed to supporting community development, aligns with the firm's broader commitment to preparing people for the future of work and closing the racial wealth gap." The piece quotes Paula Stibbe, "We launched Empowering Change in 2021 to connect institutional investors and diverse financial institutions to drive systemic change within underserved communities, and we're incredibly proud to be committing $1 million as the program's first annual donation to further this mission in collaboration with these long-standing partner organizations.... In a little over twelve months our Empower share class has not only surpassed $6 billion in assets under management but has attracted investments from some of America's most highly regarded companies, which is testament to the appeal of pioneering initiatives like Empowering Change to help advance racial equity. By expanding the number of MDI partners we're working with, we've also ensured that the program is reaching more underserved communities across the country, and we look forward to continuing to build the program in the years to come." JPMAM's release adds, "The Empower share class, offered across the firm's money market funds, was established as part of the Empowering Change program for exclusive distribution by MDIs and diverse-led CDFIs, allowing institutional clients to support MDIs and diverse-led CDFIs and further their ESG commitments. The Empowering Change program has achieved a number of significant milestones since launching in February 2021: Empower share class surpassed $6 billion in assets under management (as of 7/20/22).... Significant blue-chip institutional investment in Empower share class across a diverse range of industries, including an investment from the National Football League."

While Crane Data is gearing up for its next live event, European Money Fund Symposium, which will take place Sept. 27-28 in Paris, France, we're also starting to make plans for our next Money Fund University educational conference. Our 12th annual MFU will change slightly from its previous "basic training" format to a more advanced "Master's in Money Markets" program this year. It will take place at the Hyatt Regency in Boston, Mass., December 15-16, 2022. (We cancelled MFU last January and hosted a virtual event, but this year we'll be back live and in person.) Crane's Money Fund University is designed for those relatively new to the money market fund industry or those in need of a concentrated refresher on a broad core curriculum. The event also focuses on hot topics like money market fund regulations, money fund alternatives, offshore markets, and other recent industry trends. Our educational conference features a faculty of the money fund industry's top lawyers, strategists, and portfolio managers, and the Boston show will include an extended free training session (and lunch) for Crane Data clients, as well as a Holiday party where all are welcome. Money Fund University offers a 2-day crash course on money market mutual funds, educating attendees on the history of money funds, the Fed, interest rates, ratings, rankings, and money market instruments such as commercial paper, Treasury bills, CDs and repo. We also cover portfolio construction and credit analysis. Registrations ($750) are now being taken, and the latest agenda is available here. (E-mail us to request the latest brochure.) New portfolio managers, analysts, investors, issuers, service providers, and anyone interested in expanding their knowledge of "cash" investing should benefit from our comprehensive program. Even experienced professionals may enjoy a refresher course and the opportunity to interact with peers in an informal setting. Also, please join us for the 8th Annual Crane's European Money Fund Symposium. The latest agenda is available and registrations are still being taken for this year's European event, which will take place Sept. 27-28 at the Renaissance Paris La Defense in Paris, France. Registration for our 2022 Crane's European Money Fund Symposium is $1,000 USD. Please make your hotel reservations soon! Rooms must be booked before August 5 to receive the discounted rate of E259. Visit www.euromfs.com to register, and contact us to request the PDF brochure. (Let us know too if you'd like information on speaking or sponsorship pricing.) Mark your calendars for our next Bond Fund Symposium, which be held in Boston, Mass., on March 23-24, 2023. (Click here to see last year's agenda.) Bond Fund Symposium is the only conference devoted entirely to bond mutual funds, bringing together bond fund managers, marketers, and professionals with fixed-income issuers, investors and service providers. The majority of the content is aimed at the growing ultra-short and conservative ultra-short bond fund marketplace. Finally, mark your calendars too for our next big show, Crane's Money Fund Symposium, which will be held in Atlanta, Ga., June 21-23, 2023. Money Fund Symposium attracts money fund managers, marketers and servicers, cash investors, money market securities dealers, issuers, and regulators for 2 1/2 days of sessions, socializing and networking. Let us know if you'd like more details on any of our events, and we hope to see you in Paris in September, Boston in December or in March 2023, and Atlanta in June 2023. Thanks to all of our speakers, sponsors and supporters for your patience and support over the past 2+ rough years!

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