Money fund yields (​7-​day, annualized, simple, net) were up 1 basis point to 3.​51% on average during the week ended Friday, September 4 (​as measured by our Crane 100 Money Fund Index), after increasing 1 bp the week prior. Fund yields should remain flat in coming days (​and weeks) unless and until the Fed moves rates higher. Yields were 3.​49% on 7/​31/​26, 3.​47% on 6/​30 and on 3/​31, 3.​58% on 12/​31/​25, 4.​13% on 6/​30/​25 and 4.​28% on average on 12/​31/​24. MMFs averaged 5.​20% on 12/​31/​23. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (​currently 724), shows a 7-​day yield of 3.​41%, unchanged in the week through Friday. Prime Inst money fund yields were unchanged at 3.​61% in the latest week. Government Inst MFs were unchanged at 3.​50%. Treasury Inst MFs were up 1 bp at 3.​49%. Treasury Retail MFs currently yield 3.​26%, Government Retail MFs yield 3.​23% and Prime Retail MFs yield 3.​39%, Tax-​exempt MF 7-​day yields were down 22 bps to 1.​87%. Assets increased $​11.​7 billion in the week through Friday, and they'​ve increased by $​11.​7 billion in September month-​to-​date (​through 9/​4). But assets remain below their all-​time record high of $​8.​404 trillion hit on July 6, according to our Money Fund Intelligence Daily. MMF assets increased $​52.​8 billion in August, decreased by $​61.​4 billion in July, increased by $​58.​6 billion in June, $​208.​6 billion in May, decreased by $​108.​8 billion in April, $​49.​3 billion in March, increased by $​99.​5 billion in February, $​32.​9 billion in January, $​126.​3 billion in December, $​132.​8 billion in November, $​142.​1 billion in October and $​105.​2 billion last September. Weighted average maturities were at 39 days for the Crane MFA and 39 days the Crane 100 Money Fund Index. According to Tuesday'​s Money Fund Intelligence Daily, with data as of Friday (​9/​4), just 157 money funds (​out of 835 total) yield under 3.​0% with $​191.​4 billion in assets, or 2.​3%, while the vast majority (​678) of funds yield between 3.​00% and 3.​99% ($​8.​162 trillion, or 97.​7%). No funds yield over 4.​0%. Our Brokerage Sweep Intelligence Index, an average of FDIC-​insured cash options from major brokerages, was unchanged at 0.​29%, after falling 1 bp fifteen weeks prior. The latest Brokerage Sweep Intelligence, with data as of September 4, shows no changes over the past week. Four of the 10 major brokerages tracked by our BSI offer rates of 0.​01% for balances of $​100K (​and lower tiers). These include: E*​Trade, Merrill Lynch, Morgan Stanley and Schwab.

A press release, "Aegis Trust Builds a Tokenization Ecosystem with Impact," tells us, "Aegis Trust, a SEC qualified custodian for digital assets, ... announced the development of the world'​s first tokenized money market fund that focuses on social impact. Leveraging the blockchain eliminates delays, reduces inefficiencies, and restores trust in global aid systems. Aegis Trust is working with global investors and partners to demonstrate how investment returns and tokenized capital can help fund disaster response and humanitarian relief." It states, "​Through a partnership with regulated asset manager, the Tokenization Foundation Money Market Fund is designed to optimize cash management while generating measurable global impact through tokenized aid. Aegis Trust pledges to donate 10% of gross revenue received from this Money Market Fund to humanitarian aid and disaster relief, and benefits investors, aid workers and council members with TF Tokenized Coins. Investors are also allocated 10% TF Coins up to the first US$​10B AUM. Nonprofit organization including aid workers can receive 10% TF Coins from AI-​enabled activations and as they accrue TF Coins. As Super Validators, with governing rights to the infrastructure and information rights of the rail including reporting, monitoring, 10% TF Coin are allocated to 10 Council Members." Serra Wei, Cofounder of Aegis Trust and the Tokenization Foundation, comments, "The future of financial services is going digital and as the need for blockchain and digital asset financial solutions grows, Aegis Trust is working with global council members to build Tokenization Foundation on crisis capital infrastructure where the blockchain enables instant, traceable, and secure transfers for humanitarian aid. The Tokenization Foundation looks to relieve aid trapped in slow grant cycles, burdened by administrative overhead, and limited by opaque reporting systems to deliver funding instantly, transparently, and at scale." The release adds, "Aegis Trust is adding banking expert Steve Andrews as a member of the Board of Director at Aegis Trust to support governance and risk management with current board members Lynne Marlor, Dave Timpe and Todd Bernard. Steve'​s long career involved the operational aspects of running five banks as the President and CEO."

T. Rowe Price published an article called, "Resetting expectations: Why stable value makes sense in today'​s dynamic markets," which tells us, "The debate between stable value portfolios and money market funds has reignited, as defined contribution (​DC) consultants expect increased plan sponsor interest in reviewing/​revisiting their plans' capital preservation investment options. This is largely driven by today'​s interest rate environment, in which money market fund yields have outpaced stable value crediting rates over the past three years -- a dynamic rarely seen over the past three decades. As the interest rate cycle enters a more uncertain phase, we believe now is the time for plan sponsors to consider stable value and its place as a long term capital preservation strategy in a plan lineup." The brief continues, "With increased uncertainty over the path of interest rates going forward, plan sponsors should reexamine the trade‑​offs between capital preservation options. Money market funds and stable value strategies both play important roles in DC plan lineups, and many plans offer both options to participants. However, the two have historically behaved differently throughout changes in the interest rate cycle." It adds, "The key difference is how fast yields respond to changes in interest rates. Historically, when rates rose, money market funds benefited because their yields can increase in a short period of time. They tend to respond almost immediately to changes in the federal funds rate because they must invest in very short‑​term securities that mature and reset frequently. That same dynamic can be a detriment for money markets in a falling rate or low rate environment as money market yields reprice lower. Stable value typically reacts more slowly because portfolios are longer duration, and wrap contracts are intended to help reduce day‑​to‑​day volatility and smooth changes in the interest rate investors earn. Crediting‑​rate resets are heavily influenced by portfolio yields, market‑​to‑​book relationships, and participant cash flows."

Last week, J.​P. Morgan wrote in its "JPM Mid-​Week US Short Duration Update," that, "July was a muted month for MMFs, with inflows totaling just $​15bn, the weakest July inflows since 2021.... However, beneath the surface, `​MMFs absorbed a large share of the nearly $​300bn increase in net T-​bill supply to private investors in July. Indeed, MMFs increased their T-​bill allocations by $​264bn last month, absorbing nearly 88% of the issuance. Against this backdrop of muted inflows but heavy T-​bill absorption, MMFs rotated out of repo, with total repo allocations declining by $​124bn, bringing their allocation as a share of portfolio holdings down to 35%, the lowest since October of last year." They tell us, "Unsurprisingly, most of the decline in repo exposure came from the FICC-​cleared repo, likely reflecting a reversal of June quarter-​end balance sheet effects. At the same time, MMFs' dealer repo exposure surged, rising $​101bn and bringing total dealer repo exposure to nearly $​2.​1tn.... Within dealer repo, exposure to U.​S. banks increased by $​75bn to $​979bn, taking the year-​to-​date repo increase to $​187bn. In contrast, exposure to Canadian dealers declined by $​100bn in July, likely reflecting balance sheet adjustments around Canadian bank quarter-​end. Outside of repo, government MMFs have also trimmed other exposures; allocations to Treasury coupons and FRNs declined by $​89bn, consistent with a rotation into T-​bills this month. Government MMFs' allocations to agencies rose, modestly, to $​1.​18tn, driven by FRNs.... Looking ahead, as we enter a period of negative T-​bill supply in September, we expect funding markets to remain contained outside of modest pressures on the corporate tax date and quarter-​end." The brief adds, "Meanwhile, MMFs appear to have maintained a defensive tone, with MMF WAMs continuing to shorten. Prime WAMs fell 1.​7 days in July after declining 1.​4 days in June.... This preference for liquidity is also evident in the holdings: prime funds increased repo exposure by $​32bn. This defensive tone is prominent amid a time of elevated policy uncertainty as 1y1y OIS has moved in a wide 28bp range during July alone. At the same time, prime funds continued to add credit exposure by $​16bn in July, taking total credit exposure up $​72bn year to date.... Nearly half of this growth has been driven by both ABCP and non-​financials, which is consistent with the surge in supply this year (​ABCP outstandings $​100bn YTD; non-​financial outstandings $​125bn YTD).... Looking ahead, we continue to believe that if the growth in ABCP supply continues, prime MMFs should be able to absorb the issuance on the margin, especially given the typical seasonal trend higher in MMF balances over the next four months. That said, issuer concentration remains a key risk and continues to be a potential constraint."

Bloomberg writes "Guggenheim Seeks to Reassure Clients of Commercial-​Paper Unit." They state, "A Guggenheim subsidiary sought to reassure investors that it remains a viable issuer of short-​term financing known as commercial paper as regulators and federal prosecutors continue to probe the company'​s founder Mark Walter. Guggenheim Treasury Services '​is not a target of the investigations and continues to operate business as usual,' the company said in a message to investors seen by Bloomberg. 'GTS has a 30-​year operating history, having issued and repaid over $​12 trillion of commercial paper.'" The piece explains, "Guggenheim'​s commercial paper issuers operate '​as bankruptcy-​remote entities, which are not owned by any of the targeted entities under investigation,' according to the Aug. 20 message. '​In the unlikely event that GTS does not perform its managerial duties,' the company said, it would appoint an independent agent to repay its obligations." Discussing commercial paper, Bloomberg adds, "Money‑​market funds were once the dominant buyers, but today account for only about 20% of the market, with the rest held by banks, corporates and other cash investors. Within that market, Guggenheim Treasury Services operates asset‑​backed commercial paper conduits -- structures that issue short‑​term notes backed by secured loans. Unlike during the financial crisis, a majority of such paper is now usually backed by repurchase agreements rather than pools of receivables. Such entities have long been used by major banks and finance companies to raise short‑​term funding."

A blog posted on "Linked In" by Capital Advisors Group titled, "Getting Under the Hood," tells us, "Tier-​2 commercial paper may offer a potential for additional yield. But realizing that opportunity requires looking beyond the rating to understand the underlying credit quality and assessing whether the incremental yield is appropriate given the additional risk. As money market reforms continue to influence cash investment strategies and drive more money toward Government and Treasury money market funds, A2/​P2 -- or Tier-​2 -- commercial paper may offer institutional investors an alternative investment option and potential for additional yield." They write, "At first glance, the opportunity may seem straightforward: take on somewhat more credit risk in exchange for additional yield. But the rating is only the starting point. Tier-​2 commercial paper continues to be a viable investment for cash portfolios and a possible alternative to MMF investments. However, the underlying business dynamics of issuers can vary considerably. Our focus is on corporate issuers rather than financial issuers within the A2/​P2 universe. We then evaluate these corporate issuers to identify those that we believe exhibit characteristics consistent with what we call '​Tier-​2 by rating, Tier-​1 by quality.'" The post adds, "​The additional yield only tells part of the story. The more important question is what'​s driving it -- and whether the underlying credit fundamentals and business dynamics support the pickup in yield."

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