The Wall Street Journal'​s "Heard on the Street" column features the brief, "Federated Hermes Can Fly as High Rates Linger." They tell us, "Cash is pouring into money-​market funds. That hasn'​t translated into a stock boost lately for one of the biggest managers of those vehicles, Federated Hermes (​FHI). But an alignment may come when investors least expect it. After hundreds of billions of dollars of inflows in 2023, money-​market funds have hit new records at over $​5.​5 trillion in assets as of mid-​August, according to the Investment Company Institute. Federated, with a share of over 7% of the money-​market mutual fund market as of the second quarter, has been a big beneficiary: Its money-​fund assets have risen more than $​30 billion through the first half of the year, to a record high of $​509 billion. The company'​s net income was up 25% year-​over-​year in the second quarter." The article continues, "Yet its shares are down 4.​5% this year. A couple of things may help explain the disconnect. For one, the Securities and Exchange Commission is adopting new regulations intended to make money-​market funds more resistant to destabilizing runs that necessitate bailouts. Then there is also uncertainty about how much more growth could be in store for money-​market funds. Second-​quarter net inflows in that category at Federated, though solid, fell short of consensus analyst expectations, according to Visible Alpha." The WSJ adds, "Investors may be overly worried. For one, the SEC'​s toughest measures are primarily aimed at institutional prime and municipal funds, or funds that cater to big investors and hold corporate or municipal debt. As of earlier this year, those represented roughly $​10 billion out of Federated'​s half-​a-​trillion in the asset class. Other changes are anticipated to have overall small impacts on retail funds' yields. By the same token, it isn'​t as if individual investors -- who have been huge drivers of money-​fund flows this year -- are likely to suddenly draw back from money funds at the first sign of rates' peak. Individuals are typically late to react to rising rates, and to falling rates. Federated also has a big business in fixed-​income funds that should benefit when investors start seeking out duration to try to lock in higher yields, making the recent rise in long-​term bond yields a potential benefit, too. If the interest-​rate cycle isn'​t done with Federated Hermes, then investors shouldn'​t be either."

The New York Times recently published a transcript of an interview with New York Fed President John Williams. The full interview, entitled, "The New York Fed President Sees Interest Rates Coming Down With Inflation," mentions money markets about two-​thirds of the way through. The Times asks, "[H]​ow much is too much on QT?" Williams responds, "We'​re watching that, obviously, very carefully. Both looking at market prices and quantities and all that, but talking to market participants, talking to financial institutions, trying to understand the different factors. Right now, I think that all of the indicators are saying the same thing: the amount of reserves in the system, the stability of money market rates like the fed funds rate and other interest rates like SOFR, they'​re all showing us that we'​re in what we think of as an abundant reserves regime. We'​re in a region where there'​s plenty of reserves out there on a day-​to-​day basis. The federal funds rate doesn'​t move around very much, and other short term interest rates are very stable and consistent with the setting of monetary policy by the FOMC. We analyze a lot of different dimensions of that, and they all say the same thing: There'​s a large supply of reserves beyond what is absolutely needed to carry out monetary policy. And of course, we still have over $​1.​7 trillion in the reverse repo facility, which is another buffer, if you will, and we'​ve seen usage of that come down pretty dramatically as the US Treasury has rebuilt their account at the Federal Reserve and issued T-​bills. As the market has more short-​term instruments that they can invest in, they'​re pulling the money out of our overnight reverse repo facility, which is working exactly as planned, and exactly as we would want to do." They also ask, "What have you changed in your monitoring from the last time you were doing QT, when obviously you missed and got to that point of reserve scarcity?" He comments, "​I think there are several things that are different from September 2019. One is, at that time, the committee, the Federal Open Market Committee, was really aiming to get to a minimum level of reserves that was consistent with the efficient operation of monetary policy.... The second factor: We have the standing repo facility, we have the ability to provide extra liquidity, reserves into the system on an automatic basis, that provides a backstop for the market. In the end, what we needed to do in late 2019 was really actively add reserves into the system through our repo operations, and other operations after that. If there is stress in the market, or interest rates are going up, that facility is there, and everyone knows it'​s there." Williams adds, "​That is a second lesson of the Fall of 2019. It wasn'​t just that on a given day that there was a shortage of liquidity in the market, and that caused interest rates to go up somewhat, it was also a concern in the market about tomorrow, and the day after, and the end of the month, and the end of the quarter. `​Market participants are understandably, when there'​s a shortage of liquidity, worried about: What'​s going to happen in the future? Do I need to hunker down and preserve my liquidity because I'​m not sure where it'​s going to be? I think our framework that we have in place now, the standing repo facility, all of these not only give us a good starting point to make sure there'​s ample reserves, but they also provide that assurance that if for some reason there'​s a shock to the demand or supply reserves, that liquidity will be there automatically."

We'​re gearing up for our upcoming European Money Fund Symposium, which will take place Sept. 25-​26 at the Radisson Blu Hotel in Edinburgh, Scotland. The almost final agenda is available and registrations are still being taken for this year'​s European event We provide more details on the show below, but feel free to contact us for more information. Our 2022 European Symposium event in Paris attracted over 160 money fund professionals, sponsors and speakers, and we expect our show in Edinburgh to again be the largest gathering of money market professionals outside the U.​S <​b:>`​_. "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," says Crane Data President Peter Crane. "Our mission is to deliver the best possible conference content at an affordable price to money market fund professionals," he adds. Registration for European Money Fund Symposium is $​1,​000 USD. EMFS will be held at the Radisson Blu Hotel. Visit www.​craneeurosymposium.​com to register, and contact us to request the PDF brochure. The EMFS agenda features sessions conducted by many of the leading authorities on money funds in Europe and worldwide. Also, we'​re starting to make plans for our next Crane'​s Money Fund University, which will be held in Jersey City, NJ, Dec. 18-​19, 2023. Money Fund University covers the history of money funds, interest rates, regulations (​Rule 2a-​7), ratings, rankings, money market instruments such as commercial paper, CDs and Treasuries, and portfolio construction and credit analysis. We also include segments on offshore money funds and ultra-​short bond funds. Money Fund University'​s comprehensive program is good for both beginners and experienced professionals looking for a refresher. Finally, mark your calendars for our next Bond Fund Symposium will be held in Philadelphia, Pa., on March 25-​26, 2024 and our next Money Fund Symposium will be held in Pittsburgh, Pa., on June 12-​14, 2024. We hope to see you in Edinburgh, Jersey City, Philadelphia or Pittsburgh!

A posting to the Harvard Law School Forum on Corporate Governance" on "The SEC'​s Money Market Fund Reforms," written by Dechert'​s Brenden Carroll, Stephen Cohen, and Devon Roberson," explains, "The Securities and Exchange Commission, by a vote of 3 to 2, approved significant changes to Rule 2a-​7 and other rules that govern money market funds under the Investment Company Act of 1940 (​Amendments) on July 12, 2023. Among other things, the SEC: adopted a new mandatory liquidity fee framework under Rule 2a-​7 for institutional prime and institutional tax-​exempt money market funds in lieu of the proposed swing pricing framework; removed the redemption gate framework from Rule 2a-​7, while preserving the discretion to impose liquidity fees for non-​government money market funds (​without regard to weekly liquid asset levels); substantially increased the required minimum levels of daily and weekly liquid assets for all money market funds; enabled stable net asset value (​NAV) money market funds to institute a reverse distribution mechanism (​RDM) or similar '​share cancellation' mechanisms during a negative interest rate environment to maintain a stable $​1.​00 NAV per share; and enhanced the reporting requirements of registered money market funds on Form N-​MFP as well as SEC-​registered investment advisers to private liquidity funds on Form PF." It contiues, "The Amendments represent the most notable effort by the SEC to reform the money market fund industry since the series of reforms it adopted following the 2007-​2008 financial crisis. The SEC originally proposed the current reforms in December 2021 (​Proposal) in response to the stresses experienced by money market funds in March 2020, when the onset of the COVID-​19 coronavirus pandemic led to stresses in the broader short-​term funding markets and substantial redemptions, primarily from institutional prime money market funds. Adopting money market fund reform became a more significant policy priority for financial regulators -- both within and outside of the SEC -- following the stresses in the banking sector in early 2023 that led to three regional bank failures. Similar to the reforms following the 2007-​2008 financial crisis, the Amendments attempt to respond to significant market events and reflect the SEC'​s understanding of the roles of money market funds in the short-​term funding markets and perception of their vulnerabilities during periods of market stress. In his opening remarks, SEC Chair Gensler stated that the Amendments '​will make money market funds more resilient, liquid and transparent, including in times of stress.' Commissioners Hester M. Peirce and Mark T. Uyeda, who voted against the Amendments, expressed their disapproval of several aspects of the Amendments, including the mandatory liquidity fee framework, and suggested that the framework should have been re-​proposed for additional public comment." The update adds, "The SEC did not adopt elements of the Proposal that were most concerning to the industry, namely mandatory swing pricing for institutional money market funds and a requirement for stable NAV money market funds to determine that their intermediaries are able to support a floating NAV. However, certain elements of the Amendments will likely increase costs to fund sponsors and have commercial implications for institutional money market funds that strike their NAVs at multiple times per day and/​or offer same-​day settlement. The Amendments also raise potential issues for money market fund boards of directors, service providers, intermediaries and investors. The SEC'​s decision not to adopt the proposed swing pricing framework may also be a preview for the proposed rule that would require registered open-​end funds (​other than ETFs) to utilize swing pricing. For example, in the Adopting Release, the SEC acknowledged the operational burdens associated with swing pricing (​as highlighted by many fund sponsors that commented on the Proposal), and asserted that liquidity fees would still achieve '​many of the benefits [​the SEC was] seeking with swing pricing by allocating liquidity costs to redeeming investors in stressed periods.' This pivot may suggest flexibility in the SEC'​s preference among potential anti-​dilution mechanisms in the separate proposed swing pricing rulemaking for registered open-​end funds (​other than ETFs), though the Adopting Release conceded no ground with respect to the perceived need for an anti-​dilution mechanism."

The Investment Company Institute'​s latest "Money Market Fund Assets" report shows MMF assets flat in the latest week after hitting record levels for 5 weeks in a row. ICI'​s asset series remain just below their record $​5.​570 trillion level, after breaking above $​5.​5 trillion three weeks ago, and shows MMFs up a hair below $​1.​0 trillion, or 21.​9%, over the past year. Assets are up by $​834 billion, or 17.​6%, year-​to-​date in 2023 (​and up $​748.​4 billion, or 15.​5%, since 2/​22/​23), with Institutional MMFs up $​427 billion, or 14.​0% and Retail MMFs up $​407 billion, or 24.​3%. Over the past 52 weeks, money fund assets have risen $​999 billion, or 21.​9%, with Retail MMFs rising by $​596 billion (​40.​0%) and Inst MMFs rising by $​403 billion (​13.​1%). Their weekly release says, "Total money market fund assets decreased by $​1.​09 billion to $​5.​57 trillion for the week ended Wednesday, August 23, the Investment Company Institute reported.... Among taxable money market funds, government funds decreased by $​5.​24 billion and prime funds increased by $​4.​41 billion. Tax-​exempt money market funds decreased by $​265 million." ICI'​s stats show Institutional MMFs falling $​10.​2 billion but Retail MMFs rising $​9.​1 billion in the latest week. Total Government MMF assets, including Treasury funds, were $​4.​581 trillion (​82.​3% of all money funds), while Total Prime MMFs were $​874.​3 billion (​15.​7%). Tax Exempt MMFs totaled $​113.​3 billion (​2.​0%). ICI explains, "Assets of retail money market funds increased by $​9.​09 billion to $​2.​08 trillion. Among retail funds, government money market fund assets increased by $​2.​96 billion to $​1.​38 trillion, prime money market fund assets increased by $​6.​46 billion to $​603.​05 billion, and tax-​exempt fund assets decreased by $​325 million to $​102.​47 billion." Retail assets account for over a third of total assets, or 37.​4%, and Government Retail assets make up 66.​2% of all Retail MMFs. They add, "Assets of institutional money market funds decreased by $​10.​19 billion to $​3.​48 trillion. Among institutional funds, government money market fund assets decreased by $​8.​20 billion to $​3.​20 trillion, prime money market fund assets decreased by $​2.​05 billion to $​271.​22 billion, and tax-​exempt fund assets increased by $​60 million to $​10.​85 billion." Institutional assets accounted for 62.​6% of all MMF assets, with Government Institutional assets making up 91.​9% of all Institutional MMF totals. According to Crane Data'​s separate Money Fund Intelligence Daily series, money fund assets broke the $​5.​9 trillion level on August 1 and hit a record $​5.​967 trillion on Tuesday, 8/​15, before easing back to $​5.​953 trillion Wednesday. Assets have risen by $​72.​6 billion in August through 8/​23 after rising by $​34.​7 billion in July. 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.

While Crane Data is gearing up for its next live event, European Money Fund Symposium, which will take place Sept. 25-​26 in Edinburgh, Scotland, we are also making plans for our next Money Fund University educational conference. Our 13th annual MFU will once again focus on a higher level "Master'​s in Money Markets" format instead of its earlier "​basic training" focus, and will contain expanded content on Rule 2a-​7 and the SEC'​s new Money Market Fund Reforms. It will take place at The Westin Jersey City Newport in Jersey City, NJ, Dec. 18-​19, 2023. 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 Jersey City 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 9th 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. 25-​26 at the Radisson Blu Hotel in Edinburgh, Scotland. Registration for European Money Fund Symposium is $​1,​000 USD. Mark your calendars too for our next Bond Fund Symposium, which will be held in Philadelphia, Pa, on March 25-​26, 2024 and for our next Money Fund Symposium, which will be held in Pittsburgh, Pa., June 12-​14, 2024. Let us know if you'​d like more details on any of our events, and we hope to see you in Edinburgh next month, in Jersey City in December, in Philadelphia in March 2024, or in Pittsburgh in June 2024.

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 August 18) includes Holdings information from 55 money funds (​down 5 from a week ago), which totals $​2.​436 trillion (​down from $​2.​553 trillion) of the $​5.​930 trillion in total money fund assets (​or 41.​1%) tracked by Crane Data. (​Our Weekly MFPH are e-​mail only and aren'​t available on the website. See our latest Monthly Money Fund Portfolio Holdings here.) Our latest Weekly MFPH Composition summary again shows Government assets dominating the holdings list with Repurchase Agreements (​Repo) totaling $​1.​298 billion (​down from $​1.​387 trillion a week ago), or 53.​3%; Treasuries totaling $​705.​6 billion (​down from $​728.​3 billion a week ago), or 29.​0%, and Government Agency securities totaling $​223.​0 billion (​up from $​221.​2 billion), or 9.​2%. Commercial Paper (​CP) totaled $​76.​2 billion (​down from a week ago at $​78.​9 billion), or 3.​1%. Certificates of Deposit (​CDs) totaled $​63.​5 billion (​down from $​63.​8 billion a week ago), or 2.​6%. The Other category accounted for $​45.​7 billion or 1.​9%, while VRDNs accounted for $​23.​7 billion, or 1.​0%. The Ten Largest Issuers in our Weekly Holdings product include: the Federal Reserve Bank of New York with $​727.​7 billion (​29.​9%), the US Treasury with $​705.​6 billion (​29.​0% of total holdings), Federal Home Loan Bank with $​163.​1B (​6.​7%), Fixed Income Clearing Corp with $​135.​7B (​5.​6%), Federal Farm Credit Bank with $​50.​6B (​2.​1%), Goldman Sachs with $​39.​3B (​1.​6%), BNP Paribas with $​37.​1B (​1.​5%), RBC with $​35.​5B (​1.​5%), JP Morgan with $​34.​5B (​1.​4%) and Barclays PLC with $​28.​3B (​1.​2%). The Ten Largest Funds tracked in our latest Weekly include: Goldman Sachs FS Govt ($​267.​4B), JPMorgan US Govt MM ($​255.​0B), Fidelity Inv MM: Govt Port ($​181.​8B), Morgan Stanley Inst Liq Govt ($​160.​4B), JPMorgan 100% US Treas MMkt ($​150.​5B), Allspring Govt MM ($​115.​7B), State Street Inst US Govt ($​109.​9B), Fidelity Inv MM: MM Port ($​108.​6B), Dreyfus Govt Cash Mgmt ($​101.​2B) and Goldman Sachs FS Treas Instruments ($​88.​3B). (​Let us know if you'​d like to see our latest domestic U.​S. and/​or "​offshore" Weekly Portfolio Holdings collection and summary.)

Barron'​s writes that, "Treasury Bills are the Sweet Spot for Yield." It tells us, "​When looking for juicy yields, investors these days should stay short. Buying long-​dated Treasury bonds seemed like a great opportunity earlier this year, but now they look set to do what bonds have done all too often—​lose money. Short-​term Treasury bills, which yield more than 5.​4%, still look like an investor’​s better income bet. Just a few months ago, the 10-​year Treasury yield was sitting near 3.​3%, and all the talk was about taking advantage following 2022’​s massive bond selloff. It hasn’​t worked out well. Treasury yields have spiked as prices fell, and the iShares 20+ Year Treasury Bond exchange-​traded fund (​ticker: TLT), which tracks returns on long-​dated U.​S. government bonds, has suffered losses of 2.​7% during the past three months and is down 8% in 2023, on pace for its third consecutive year o"​f declines." Barron'​s says, "​For investors seeking income, most bond funds have not fulfilled their promises. Treasury bills, though? They’​ve been fantastic, at least as fantastic as fixed income can be. The iShares Short Treasury Bond ETF (​SHV), which owns bills and notes maturing in 12 months or less, has returned 2.​9% so far this year, already surpassing its best return since its inception in 2008. And as long as yields keep rising -- or until investors feel like they have a better read on what the Federal Reserve will do next -- Treasuries with short maturities are probably the best place to turn for income right now." They add, "​A simpler option is to buy an ETF that invests in nothing but ultra-​short-​term Treasuries, such iShares 0-​3 Month Treasury Bond (​SGOV), or SPDR Bloomberg 1-​3 Month T-​Bill (​BIL), while those wanting to target a specific maturity, like the three-​month bill, could buy the US Treasury 3 Month Bill ETF (​TBIL) from F/​m Investments, which offers a series of funds that invest in specific Treasury maturities. Money-​market accounts are another option for low-​risk yield."

The Wall Street Journal writes, "Rising Yields Fatten Americans' Pocketbooks. They tell us, "​The summer bond-​market rout is delivering a windfall to savers whose rush into higher-​yielding investment products is reshaping the U.​S. financial system. Americans poured $​36 billion into money-​market funds in the latest week, taking advantage of yields that have soared past 5% -- a figure that only recently seemed like a dream for consumers and businesses shopping for a place to park their cash. That marked the biggest weekly inflows since May, according to Refinitiv Lipper data through Aug. 16. Assets in retail money-​market funds have surged more than 25% this year, according to Federal Reserve data, to a record $​1.​5 trillion. Funds from firms including Vanguard Group, Charles Schwab and JPMorgan Chase are offering yields above 5%.... [Money] funds recently paid an average interest rate of 5.​15%, according to Crane Data, the highest level since 1999." The Journal piece continues, "For consumers and businesses, higher short-​term interest rates are giving them a chance to do something they haven’​t since the days before the 2008 financial crisis: park money in safe places and get paid well for it.... Of course, the epic shift of these funds isn'​t without its potential costs. Regional banks have come under pressure this year as savers awoke to the possibility of getting better paid elsewhere to park their funds. Deposits in noninterest-​bearing deposits at U.​S. banks fell 18% from a year ago in the first quarter, according to Federal Deposit Insurance Corp. data. Those fleeting deposits are raising questions on Wall Street about the viability and long-​term business prospects of thousands of smaller banks." See also, the WSJ'​s update "Where Investors Are Finding Returns in a World of Yield."

Federated Hermes' Deborah Cunningham wrote earlier this month on the SEC'​s latest MMF Reforms in, "New rules, same role." She states, "Investors will have the ultimate say about the impact of the SEC'​s new money market fund amendments released last month. We think their response will be positive. Why? Because the core attributes that make money funds popular remain, and in most cases are enhanced. Remember '​fees and gates?' The recent removal of redemption gates and the link between the weekly liquid asset threshold and potential fees (​both levied by the 2014 '​reforms') will improve all prime and municipal investors' access to their cash." Cunningham continues, "On the retail side, boards will retain the option to impose fees to maintain the integrity of the stable NAV -- though we examined past periods of market stress and did not find any times where we would have implemented a fee. That confidence stems from our policy to hold high level of daily and weekly liquid assets.... The new thresholds of 25% and 50% will probably cost investors in prime money funds some yield (​we estimate a few basis points). But their value proposition won'​t change as they likely will continue to offer a yield spread over government funds. In net, we expect increased use of retail prime and muni money market funds, in particular by sweep accounts that once used them extensively." She asks, "​Remember when interest rates were near zero? It seems like a decade ago. But during that period, the SEC asked the industry for proposals on how to handle negative rates, even though the Federal Reserve repeatedly said it opposed implementing them. The SEC listened to us, offering two solutions for running a stable NAV fund if rates ever fall below zero: a fund could float its NAV or opt to maintain a stable NAV by reducing the number of shares outstanding through a '​reverse distribution mechanism.'" Finally, the Federated MM CIO says, "​That takes us to the new mandatory liquidity fee requirement (​different than the discretionary fee outlined above). This rule requires institutional prime and institutional tax-​exempt money market funds to impose fees when daily net redemptions exceed 5% of the fund'​s net assets, unless the liquidity cost of the redemptions are determined to be de minimis (​defined as less than 1 basis point). If you recall, institutional versions of prime and tax-​free money funds are the same ones the SEC forced to float their NAVs in 2014. This is why we are not overly concerned. We don'​t think the institutional investors who remained in (​or later returned to) them will exit now because of the potential of a fee that likely to be rare and measured in basis points. They are there for the potential of yield spreads over government money funds. While the new amendments largely benefit money funds, there are now a host of other cash management vehicles not subject to them: private funds, state/​local government pools, money market collective investment trusts (​CITs) and the like. Industry-​wide, their use has increased, and we expect that trend to continue. In the end, we are confident the role that money market funds play in cash management will remain attractive for investors."

The latest "Minutes of the Federal Open Market Committee July 25-​26, 2023" state, "There was a strong anticipation, evident in both market-​based measures and responses to the Desk'​s surveys, that the Committee would raise the target range 25 basis points at the July FOMC meeting. Most survey respondents had a modal expectation that a July rate hike would be the last of this tightening cycle, although most respondents also perceived that additional monetary policy tightening after the July FOMC meeting was possible. As inferred from their responses, survey respondents expected real rates to increase through the first half of 2024 and to remain above their expectations for the long-​run neutral levels for a few years.... The manager then turned to money market developments and policy implementation. The overnight reverse repurchase agreement (​ON RRP) facility continued to work as intended over the intermeeting period and had been instrumental in providing an effective floor under the federal funds rate and supporting other money market rates; those rates remained stable over the period. Following the suspension of the debt ceiling in early June, the Treasury Department issued securities, notably Treasury bills, to replenish the Treasury General Account (​TGA). The resulting greater availability of Treasury bills, which were priced at rates slightly above the current and expected ON RRP rates, induced a net decline in ON RRP balances for the period. A further decline in ON RRP balances was deemed probable amid sustained projected Treasury bill issuance, further reductions in the size of the Federal Reserve'​s balance sheet in accordance with the previously announced Plans for Reducing the Size of the Federal Reserve'​s Balance Sheet, and a possible further reduction in policy uncertainty that could incentivize money funds to extend the duration of their portfolios. In the July Desk Survey of Primary Dealers, respondents expected lower ON RRP balances and higher bank reserves by the end of the year, compared with the June survey." The FOMC comments, "Over the intermeeting period, the market-​implied path for the federal funds rate rose modestly, while the timing of the path'​s slightly higher peak moved a little later, to just after the November meeting. Beyond this year, the policy rate path implied by overnight index swap (​OIS) quotes ended the period modestly higher. Yields on Treasury securities increased modestly at shorter maturities but only a bit at longer maturities. Measures of inflation compensation rose only slightly for near-​term and longer maturities. Measures of uncertainty about the path of the policy rate derived from interest rate options remained very elevated by historical standards." The Minutes add, "Conditions in domestic short-​term funding markets remained generally stable over the intermeeting period. Spreads in unsecured markets narrowed modestly amid slight increases in OIS rates. Following the suspension of the debt limit, the Treasury Department partly replenished the TGA via a large net increase in bill issuance. Auctions of Treasury bills were met with robust demand, as shorter-​term bill yields increased relative to other money market rates. Money market funds increased their holdings of Treasury bills and reduced their investments with the ON RRP facility. ON RRP take-​up declined notably -- about $​390 billion -- over the intermeeting period, reflecting more attractive rates on some alternatives to investing in the ON RRP facility. Despite reduced ON RRP take-​up, money funds maintained relatively high asset allocations in overnight repurchase agreement investments amid still-​elevated uncertainty about the future path of policy."

The Federal Reserve Bank of New York'​s "Liberty Street Economics blog features a post entitled "The Federal Reserve'​s Two Key Rates: Similar but Not the Same?" They explain, "Since the global financial crisis, the Federal Reserve has relied on two main rates to implement monetary policy -- the rate paid on reserve balances (​IORB rate) and the rate offered at the overnight reverse repo facility (​ON RRP rate). In this post, we explore how these tools steer the federal funds rate within the Federal Reserve'​s target range and how effective they have been at supporting rate control. The Federal Open Market Committee (​FOMC) communicates its stance of monetary policy through a target range for the federal funds (​fed funds) rate -- the interest rate at which banks borrow funds overnight on an unsecured basis in the fed funds market. The Federal Reserve (​the Fed) currently implements monetary policy in a regime of ample reserves, where control over the fed funds and other short-​term interest rates is exerted through two administered rates set by the Fed: the IORB rate and the ON RRP rate." The blog continues, "The IORB is the rate that the Fed pays on the reserves that banks hold overnight in their Fed accounts, thereby setting a floor on the rates at which banks lend overnight in the fed funds market. The Fed has paid IORB since October 2008. Banks, however, are only responsible for a fraction of the lending activity in the fed funds market and other U.​S. money markets. For this reason, the Fed employs a second lever: the ON RRP rate. The ON RRP facility allows eligible institutions, including money market funds, government-​sponsored enterprises, and primary dealers, to invest overnight with the Fed at the ON RRP rate. This second lever, which was added to the Fed policy toolkit in 2014, works similarly to the IORB rate, establishing a floor on the rates at which these non-​bank institutions are willing to lend funds overnight." It states, "In most FOMC meetings, the IORB and ON RRP rates are adjusted by the same amount as the target range. However, in seven of the twenty-​seven FOMC meetings in our sample, either the IORB or the ON RRP rate were adjusted by a different amount than the target range, a so-​called technical adjustment. For instance, on May 2, 2019, the IORB rate was changed from 2.​4 percent to 2.​35 percent, whereas the target range and ON RRP rate were left unchanged. Because of this, we can estimate the impact of adjusting the level of these administered rates with respect to that of the target range." The piece adds, "The Fed relies on the IORB and ON RRP rates to implement monetary policy. These two administered rates have shown to be very effective at maintaining the fed funds rate within the target range. While they work through similar channels -- steering the rates at which money market participants are willing to lend funds overnight -- they influence the distribution of fed funds rates differently, with the IORB rate mainly affecting the median and the ON RRP rate the left tail."

Money fund yields inched higher over the past week, after breaking the 5.​0% level for the first time since August 2007 three weeks ago. The Crane 100 Money Fund Index (​7-​Day Yield) rose by 1 basis point to 5.​14% in the week ended Friday, 8/​11, after increasing by 9 bps the previous week. We expect yields to inch higher in coming days as they finish digesting the Fed'​s July 26th 25 basis point hike. Yields are up from 4.​94% on June 30, 4.​61% on March 31 and 4.​05% on 12/​31/​22. Three-​quarters of money market fund assets now yield 5.​0% or higher and a third fund hit the 5.​5% level on Friday. (​They should get more company in coming days.) Assets of money market funds rose by $​22.​7 billion last week to $​5.​934 trillion according to Crane Data'​s Money Fund Intelligence Daily, and they have risen by $​53.​1 billion in the month of August (​after rising $​34.​7 billion in July). Weighted average maturities were unchanged last week, and were mostly unchanged in July (​at 24 days), after increasing by 3 days during June. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (​currently 681), shows a 7-​day yield of 5.​03%, up 1 bp in the week through Friday. Prime Inst MFs were up 1 bp at 5.​24% in the latest week. Government Inst MFs were up 2 bps at 5.​10%. Treasury Inst MFs up 1 bps for the week at 5.​07%. Treasury Retail MFs currently yield 4.​85%, Government Retail MFs yield 4.​80%, and Prime Retail MFs yield 5.​05%, Tax-​exempt MF 7-​day yields were down 50 bps to 2.​71%. According to Monday'​s Money Fund Intelligence Daily, with data as of Friday (​8/​11), 108 money funds (​out of 810 total) yield under 3.​0% with $​80.​5 billion in assets, or 1.​4%; 25 funds yield between 3.​00% and 3.​99% ($​43.​4 billion, or 0.​7%), 244 funds yield between 4.​0% and 4.​99% ($​1.​304 trillion, or 22.​0%) and 433 funds now yield 5.​0% or more ($​4.​506 trillion, or 75.​9%). Our Brokerage Sweep Intelligence Index, an average of FDIC-​insured cash options from major brokerages, was up 1 bp at 0.​62% after rising 2 bps the week prior to last. The latest Brokerage Sweep Intelligence, with data as of Aug 11, shows that there was one change over the past week, RW Baird raised its rates to 2.​09% for all balances between $​1K and $​999K, to 3.​23% for balances between $​1M and $​1.​9M, and to 4.​17% for all balances of $​5M or greater. Three of the 11 major brokerages tracked by our BSI still offer rates of 0.​01% for balances of $​100K (​and lower tiers). These include: E*​Trade, Merrill Lynch and Morgan Stanley.

J.​P. Morgan'​s latest "Mid-​Week US Short Duration Update features a brief which asks, "Are liquidity fees swing pricing in disguise?" They explain, "​It'​s been nearly a month since the SEC finalized the third round of MMF reforms. Arguably, the outcome was better than expected given the dreaded swing pricing component was removed from the final rule, fees/​gates were delinked from weekly liquid asset thresholds, and the use of RDM was no longer banned.... But it was'​nt all that great either, as MMFs will have to not only contend with higher daily and weekly liquidity asset requirements but also impose mandatory liquidity fees. Fees would be applied to redeeming shareholders when a fund experiences net redemptions greater than 5% of net assets." JPM writes, "In general, the likelihood of an institutional prime MMF seeing more than 5% in net redemptions is low. That said, flow behaviors differ meaningfully across large and small funds.... Investor concentration becomes a crucial issue. Moreover, calculating the liquidity fee is problematic. Extensive analysis would likely need to be done to determine spread costs, other transaction costs, and market impact costs, all of which feed into the liquidity fee calculation. Furthermore, the implementation of the liquidity fee is wonky." The piece comments "We believe fund managers and shareholders will manage their portfolios and cash, respectively, to minimize the likelihood of a liquidity fee being imposed, both in ordinary times and in stressed environments. In so doing, managing investor concentration becomes paramount. Shareholders might move to other cash alternatives to avoid potential liquidity fees altogether. Funds might be encouraged to hold more liquidity. Ultimately, we wouldn'​t be surprised if the reforms result in lower institutional prime fund AUMs. We think this rule favors larger institutional prime fund families, while smaller fund families and internal funds may determine that the operational costs and challenges to implement and ongoing costs to manage mandatory liquidity fees might not be worth it. Further industry consolidation seems likely. Conversion to institutional government MMFs also seems likely (​it'​s the path of least resistance), though it'​s possible that the cash shifts into other liquidity credit products such as SMAs as well. Swing pricing or liquidity fee, the direction of travel for institutional prime funds appears to be the same."

The Investment Company Institute'​s latest "Money Market Fund Assets" report shows MMF assets hitting record levels for the fourth week in a row following a brief pause in mid-​June and July. ICI'​s asset series broke the $​5.​5 trillion level for the first time ever last week, and shows MMFs up almost $​1.​0 trillion, and over 20%, over the past year. Assets are up by $​795 billion, or 16.​8%, year-​to-​date in 2023 (​and up $​709.​8 billion, or 14.​7%, since 2/​22/​23), with Institutional MMFs up $​413 billion, or 13.​5% and Retail MMFs up $​382 billion, or 22.​8%. Over the past 52 weeks, money fund assets have risen $​963 billion, or 21.​1%, with Retail MMFs rising by $​583 billion (​39.​4%) and Inst MMFs rising by $​380 billion (​12.​3%). Their weekly release says, "Total money market fund assets increased by $​14.​37 billion to $​5.​53 trillion for the week ended Wednesday, August 9, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $​4.​30 billion and prime funds increased by $​7.​76 billion. Tax-​exempt money market funds increased by $​2.​31 billion." ICI'​s stats show Institutional MMFs rising $​5.​2 billion and Retail MMFs jumping $​9.​2 billion in the latest week. Total Government MMF assets, including Treasury funds, were $​4.​549 trillion (​82.​3% of all money funds), while Total Prime MMFs were $​864.​8 billion (​15.​6%). Tax Exempt MMFs totaled $​116.​3 billion (​2.​1%). ICI explains, "Assets of retail money market funds increased by $​9.​15 billion to $​2.​06 trillion. Among retail funds, government money market fund assets increased by $​663 million to $​1.​37 trillion, prime money market fund assets increased by $​6.​52 billion to $​589.​76 billion, and tax-​exempt fund assets increased by $​1.​97 billion to $​105.​02 billion." Retail assets account for over a third of total assets, or 37.​3%, and Government Retail assets make up 66.​3% of all Retail MMFs. They add, "Assets of institutional money market funds increased by $​5.​22 billion to $​3.​47 trillion. Among institutional funds, government money market fund assets increased by $​3.​64 billion to $​3.​18 trillion, prime money market fund assets increased by $​1.​24 billion to $​275.​01 billion, and tax-​exempt fund assets increased by $​341 million to $​11.​26 billion." Institutional assets accounted for 62.​7% of all MMF assets, with Government Institutional assets making up 91.​8% of all Institutional MMF totals. (According to Crane Data'​s separate Money Fund Intelligence Daily series, money fund assets broke the $​5.​9 trillion level on August 1 and hit a record $​5.​933 trillion on 8/​8, before easing back to $​5.​923 trillion yesterday. Assets have risen by $​42.​5 billion in August through 8/​9 after rising by $​34.​7 billion in July. 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.)

CNBC writes, "PayPal'​s stablecoin is first dollar-​backed digital currency from a major U.​S. financial institution." They explain, "PayPal ... launched a U.​S. dollar-​backed stablecoin to help facilitate payments as its latest addition to its suite of crypto services. It'​s the first such move from a major U.​S. financial institution. The new asset, called PayPal USD (​PYUSD), was designed to address the '​emerging potential' to '​transform payments in Web3 and digitally native environments.' Its launch comes as market participants await a vote in Congress on a key stablecoin bill, which has just advanced to the House with three other crypto bills for the first time." The CNBC piece continues, "PayPal said the stablecoin'​s function is to reduce friction for in-​experience payments in virtual settings and allow direct flows to developers. It'​s redeemable for dollars and backed by dollar deposits, short-​term U.​S. Treasurys and similar cash equivalents." Dan Schulman, president and CEO of PayPal, comments, "The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the U.​S. dollar. Our commitment to responsible innovation and compliance, and our track record delivering new experiences to our customers, provides the foundation necessary to contribute to the growth of digital payments through PayPal USD." The article adds, "The PayPal stablecoin is issued by Paxos, a veteran of the stablecoin space and PayPal'​s brokerage partner for its crypto buying and selling services. Paxos also previously issued the dollar-​pegged, Binance-​branded stablecoin BUSD. It was ordered by the New York State Department of Financial Services in February to stop issuing BUSD, which marked the beginning of this year'​s decline in the stablecoin market cap." (​See our July 27 People News," "Adam Ackermann Joins Paxos," which says, "Adam Ackermann, formerly of J.​​P. Morgan Asset Management and VaultLink, has joined Paxos as Head of Portfolio Management. (​​See Ackermann'​s LinkedIn post here.)

The Wall Street Journal'​s "Live Update" posted the brief, "Money-​Market Fund Yields Soar to 16-​Year High." It tells us, "​Good news for savers: Money-​market funds are offering the most attractive yields in around 16 years. The average yield on 100 of the largest money-​market funds tracked by Crane Data recently hovered at 5.​13%, the highest level since 2007. Investors have taken note, sending assets in such funds to $​5.​9 trillion, the most on record. Money-​market funds are considered low-​risk and invest in short-​term debt, such as U.​S. Treasury bills. They are seen as '​cash equivalents' that investors can easily access." It adds, "​For years after the 2008 financial crisis, investors held on to the belief that '​there is no alternative' to stocks -- or TINA–​for high returns. Now, there are alternatives -- including one that'​s yielding 5%. Contrary to what many expected just months ago, stocks have climbed alongside yields in some of the safest investments this year. Many investors predicted that higher Treasury yields and an aggressive interest-​rate hiking cycle would lead to a big sell-​off in stocks. Instead, riskier assets have climbed alongside bond yields." The piece features a chart of the Crane 100 Money Fund Index since 2007. See also, the Federal Reserve Bank of New York'​s latest "Additions and Removals" to its List of Reverse Repo Counterparties. They state, "The following have been added to the list of reverse repo counterparties, effective August 8, 2023. Farm Credit Bank of Texas, Credit Suisse AG, New York Branch and Schwab US Treasury Money Fund."

Money fund yields rose over the past week, after breaking the 5.​0% level for the first time since August 2007 the previous week. The Crane 100 Money Fund Index (​7-​Day Yield) rose by 9 basis points to 5.​13% in the week ended Friday, 8/​4, after increasing by 8 bps the previous week. We expect yields to inch higher in coming days as they finish digesting the Fed'​s July 26th 25 basis point hike. Yields are up from 4.​94% on June 30, 4.​61% on March 31 and 4.​05% on 12/​31/​22. Three-​quarters of money market fund assets now yield 5.​0% or higher and two funds hit the 5.​5% level on Friday. (​They should get more company in coming days.) Assets of money market funds rose by $​46.​2 billion last week to $​5.​911 trillion according to Crane Data'​s Money Fund Intelligence Daily, and they have risen by $​30.​4 billion for the month of August (​after rising $​34.​7 billion in July). Weighted average maturities were unchanged last week, and were mostly unchanged in July (​at 24 days), after increasing by 3 days during June. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (​currently 682), shows a 7-​day yield of 5.​02%, up 8 bps in the week through Friday. Prime Inst MFs were up 10 bps at 5.​23% in the latest week. Government Inst MFs were up 9 bps at 5.​08%. Treasury Inst MFs up 6 bps for the week at 5.​05%. Treasury Retail MFs currently yield 4.​83%, Government Retail MFs yield 4.​79%, and Prime Retail MFs yield 5.​04%, Tax-​exempt MF 7-​day yields were up 1 bp to 3.​22%. According to Monday'​s Money Fund Intelligence Daily, with data as of Friday (​8/​4), 29 money funds (​out of 811 total) yield under 3.​0% with just $​16.​2 billion in assets, or 0.​3%; 104 funds yield between 3.​00% and 3.​99% ($​107.​2 billion, or 1.​8%), 251 funds yield between 4.​0% and 4.​99% ($​1.​292 trillion, or 21.​9%) and 427 funds now yield 5.​0% or more ($​4.​496 trillion, or 76.​1%). Our Brokerage Sweep Intelligence Index, an average of FDIC-​insured cash options from major brokerages, was unchanged at 0.​61% after rising 2 bps last week. The latest Brokerage Sweep Intelligence, with data as of Aug 4, shows that there were no changes over the past week, but Fidelity raised its rates the previous week to 2.​72% for all balances. Three of the 11 major brokerages tracked by our BSI still offer rates of 0.​01% for balances of $​100K (​and lower tiers). These include: E*​Trade, Merrill Lynch and Morgan Stanley.

We hope you'​ll join us for our 9th Annual European Money Fund Symposium, which will take place Sept. 25-​26 at the Radisson Blu Hotel in Edinburgh, Scotland. The latest agenda is available here and we continue to take registrations. (Make your hotel reservations ASAP if you do plan on attending!) Below are more details on our upcoming shows, but feel free to contact us for more information. Our 2022 European MF Symposium event in Paris attracted a record 160 money fund professionals, sponsors and speakers, and we again expect our show in Edinburgh to once again be the largest gathering of money market professionals outside the U.​S. "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," says Crane Data President Peter Crane. "Our mission is to deliver the best possible conference content at an affordable price to money market fund professionals," he adds. Registration for European Money Fund Symposium is $​1,​000 USD. EMFS will be held at the Radisson Blu Hotel. Hotel rooms must be booked before August 18 to receive our discounted rate of E320. Visit www.​craneeurosymposium.​com to register, and contact us to request the PDF brochure. (​Let us know too if you'​d like information on speaking or sponsorships.) Also, start making plans for our next Crane'​s Money Fund University, which will be held in Jersey City, NJ, Dec. 18-​19, 2023. Money Fund University covers the history of money funds, interest rates, regulations (​Rule 2a-​7), ratings, rankings, money market instruments such as commercial paper, CDs and Treasuries, and portfolio construction and credit analysis. We also include segments on offshore money funds and ultra-​short bond funds. Money Fund University'​s comprehensive program is good for both beginners and experienced professionals looking for a refresher. Finally, mark your calendars for our next Bond Fund Symposium, which will be held March 25-​26, 2024 in Philadelphia, Pa., and our next Money Fund Symposium will be held in June 12-​14, 2024 in Pittsburgh, Pa. Again, let us know if you'​d like more details on any of our events, and we hope to see you in Edinburgh in September, in Jersey City in December or in Philadelphia in March 2024. Thanks to all of our speakers and sponsors for your support!

The Investment Company Institute'​s latest "Money Market Fund Assets" report shows MMF assets hitting record levels again following a brief pause in mid-​June and July. ICI'​s asset series broke the $​5.​5 trillion level for the first time ever, and shows MMFs up almost $​1.​0 trillion, and over 20%, over the past year (​and up $​695.​4 billion, or 14.​4%, since 2/​22/​23. Assets are up by $​781 billion, or 16.​5%, year-​to-​date in 2023, with Institutional MMFs up $​408 billion, or 13.​3% and Retail MMFs up $​373 billion, or 22.​2%. Over the past 52 weeks, money fund assets have risen $​940 billion, or 20.​5%, with Retail MMFs rising by $​576 billion (​39.​1%) and Inst MMFs rising by $​364 billion (​11.​7%). Their weekly release says, "Total money market fund assets increased by $​28.​95 billion to $​5.​52 trillion for the week ended Wednesday, August 2, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $​22.​65 billion and prime funds increased by $​3.​52 billion. Tax-​exempt money market funds increased by $​2.​78 billion." ICI'​s stats show Institutional MMFs rising $​11.​5 billion and Retail MMFs jumping $​17.​4 billion in the latest week. Total Government MMF assets, including Treasury funds, were $​4.​545 trillion (​82.​4% of all money funds), while Total Prime MMFs were $​857.​0 billion (​15.​5%). Tax Exempt MMFs totaled $​114.​0 billion (​2.​1%). ICI explains, "Assets of retail money market funds increased by $​17.​43 billion to $​2.​05 trillion. Among retail funds, government money market fund assets increased by $​10.​54 billion to $​1.​36 trillion, prime money market fund assets increased by $​4.​46 billion to $​583.​24 billion, and tax-​exempt fund assets increased by $​2.​43 billion to $​103.​05 billion." Retail assets account for over a third of total assets, or 37.​2%, and Government Retail assets make up 66.​5% of all Retail MMFs. They add, "Assets of institutional money market funds increased by $​11.​52 billion to $​3.​46 trillion. Among institutional funds, government money market fund assets increased by $​12.​11 billion to $​3.​18 trillion, prime money market fund assets decreased by $​941 million to $​273.​77 billion, and tax-​exempt fund assets increased by $​349 million to $​10.​92 billion." Institutional assets accounted for 62.​8% of all MMF assets, with Government Institutional assets making up 91.​8% of all Institutional MMF totals. (According to Crane Data'​s separate Money Fund Intelligence Daily series, money fund assets broke the $​5.​9 trillion level on August 1, hitting a record $​5.​923 trillion, before easing back to $​5.​917 trillion yesterday. Assets have risen by $​35.​8 billion in August through 8/​2 after rising by $​34.​7 billion in July. 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.)

Federated Hermes Sue Hill writes on the "Middle Ground" in a new commentary. It says, "With the impact of its tightening still not apparent, the Fed opted for another modest rate hike. A compromise pleases no one completely, but the Federal Reserve had to take the middle ground at [​last week'​s] policy-​setting meeting. Despite reports of a growing divide among FOMC participants as to the proper course, there was no evidence of dissension in the meeting statement. Far from it. Their hike of the fed funds target range by 25 basis points to a 22-​year high of 5.​25-​50% was unanimous. It'​s that they simply don'​t know where the economy is situated and are wisely being cautious.... But the Fed is mindful of another uncertainty -- the timing of the lags with which monetary policy affects economic activity. If the Fed was successful at accelerating the transmission of policy with its rapid pace of hikes last year, then they certainly haven'​t gotten the impact that they desired. But if the lags are more traditional -- 12 to 18 months, if not more -- then a wave of policy restriction has yet to hit. This is more likely, as policy only stopped being accommodative in the second half of last year. And therefore the compromise make sense: being open to more tightening but allowing upcoming data to show the way forward." Hill adds, "The Fed raised the metrics that the Fed uses to implement monetary policy in kind, most notably adjusting the rates on the New York Fed Reverse Repo Facility and Interest on Reserves to 5.​30% and 5.​40%, respectively. The Fed should be pleased with how well the market has absorbed a recent deluge of Treasury supply without any corresponding impact on the functioning of the funding markets. The Treasury Department has issued over $​700 billion in bills since the suspension of the federal debt limit in early June. This rapid replenishing of Treasury'​s cash balance, boosting its coffers more than $​500 billion -- had the potential to put downward pressure on bank reserves. To the Fed'​s relief, we are sure, that increase was offset by a material decline in the use of the Fed'​s Reverse Repo Facility, as money fund investors were finally able to redeploy some assets into other types of investments. As a result, bank reserves did not decline as feared."

The Wall Street Journal tells us, "Everyday Investors Are Thriving in a World Awash in Yield." The article states, "Interest rates are hovering at their highest level in more than two decades. For individual investors, that has been an unexpected blessing. Although it is more expensive for consumers to borrow money now than it was 18 months ago, they also have more options to put their cash to work. American households are earning an additional $​121 billion from income on investments annually versus a year ago, according to Commerce Department data through June, blunting the $​151 billion increase in interest payments on mortgages, credit cards and other loans." It continues, "​That has pushed yields on three- and six-​month Treasurys to about 5.​5%, the highest since 2001. Money-​market funds, which typically invest in T-​bills or park cash at the Fed, are offering rates above 5%. And certificates of deposits, or CDs, are offering up to 5.​4% for one-​year terms." The piece adds, "​Unsatisfied with earning next-​to-​nothing when his cash was parked at a small community bank, Eric Reed, 25, an insurance analyst in Springfield, Ill., moved more than a quarter of his portfolio into other investments. He scooped up Treasury bills yielding 5.​25%, a money-​market fund paying 5% and a high-​yield savings account offering 4.​15%. And that was before the Fed’​s latest rate increase." (​See also WSJ'​s "Banks Lean On ‘​Hot’ Deposits to Shore Up Balance Sheets.")

Today, we link to and quote from two briefs on new developments in the repurchase agreement, or repo market. State Street writes on "The Case for Peer-​to-​Peer Repo Solutions in EMEA," while GLMX posted the release, "Record $​1.​5 Trillion Daily Balance Reached on GLMX Platform as Adoption of Electronic Trading for Securities Finance Accelerates." The former says, "​Investors are seeking the right tools for liquidity and diversification in this everchanging market environment. Market volatility and the recent banking crisis are hinting at a near-​term recession for markets worldwide. This market volatility -- combined with credit concerns -- has led investors to consider risk-​efficient options that will support cash investment and cash borrowing effectively. Moreover, excess cash with interest rates well into positive and restrictive territory across the globe present a significant opportunity cost. As a result, investors are looking for alternative repo solutions to diversify their collateral sourcing and cash investment capabilities, which can be critical during times of crises. In this article, we review the evolution of the repo market, describe the effects of recent market events, and outline how a peer-​to-​peer repo model can be beneficial in the Europe, the Middle East and Africa (​EMEA) markets." The latter tells us, "GLMX Technologies LLC, a comprehensive global technology solution for trading Money Market instruments, including repurchase agreements and securities lending transactions, for the first time eclipsed $​1.​5 trillion in daily balances. These balances represent the trading activity of some of the largest global financial institutions which utilize GLMX technology to negotiate and execute securities financing transactions (​SFTs). Since inception, GLMX has seen $​186 trillion in volume executed via its technology. Glenn Havlicek, CEO and Co-​Founder of GLMX, comments, "Exceeding $​1.​5 trillion in balances reflects the over 120% year-​over-​year growth we saw at June 30 of this year. Further, it speaks to the amazing effort of GLMX employees and the speed at which the money market industry is welcoming innovative technology. The success GLMX has achieved in the securities finance market is replicable across the greater money market ecosystem which is where we have been expanding our focus and will continue to do so moving forward."

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