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The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (formerly the "Flow of Funds") late last week. Among the 4 tables it includes on money market mutual funds, the Third Quarter, 2018 edition shows that Total MMF Assets increased by $46 billion to $2.867 trillion in Q3. The Household Sector saw assets move higher; it remained the largest investor segment with $1.614 trillion. The next largest segment, Nonfinancial Corporate Businesses also saw assets increase in the third quarter, as did Funding Corporations' (which we believe is primarily securities lending reinvestment cash) holdings of money funds. We review the latest Z.1 stats below.

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Crane Data's latest Money Fund Market Share rankings show assets were higher again for most U.S. money fund complexes in November. Money fund assets rose by $79.4 billion, or 2.5%, last month to $3.170 trillion, and assets have risen by $100.6 billion, or 3.3%, over the past 3 months. They have increased by $187.5 billion, or 6.3%, over the past 12 months through Nov. 30, 2018. The biggest increases among the 25 largest managers last month were seen by Fidelity, JPMorgan, Morgan Stanley, Federated and Schwab, who increased assets by $14.2 billion, $14.0B, $10.3B, $9.7B, and $8.4B, respectively. We review the latest market share totals below, and we also look at money fund yields in November.

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The December issue of our flagship Money Fund Intelligence newsletter, which was sent out to subscribers on Friday, features the articles: "Money Funds Beat Bond Funds; First Time in Decade," which looks at returns and asset flows of bonds vs. MMFs; "JPMorgan Live w/European Reform Lineup; New VNAVs," a review of JPMAM's new VNAV fund ratings; and, "Asset Whiplash from Wed.; WAMs at Record Lows in '18," which reviews a huge drop then spike in assets this week, and fund WAMs. We've also updated our Money Fund Wisdom database with Nov. 30 statistics, and sent out our MFI XLS spreadsheet Friday a.m. (MFI, MFI XLS and our Crane Index products are all available to subscribers via our Content center.) Our December Money Fund Portfolio Holdings are scheduled to ship on Tuesday, December 11, and our Dec. Bond Fund Intelligence is scheduled to go out Friday, December 14.

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The Wall Street Journal writes "Cash Is a Star in Rocky Year for Global Markets," which says, "In a year of anemic returns and wild gyrations across most markets, cash is a star. U.S. cash and cash equivalents are on track to be some of the best-performing assets in 2018, enticing money managers struggling with a rare synchronized downturn in stocks, commodities and bond markets. Rising returns on cash make it more appealing for investors to move out of other investments, risking a turning point for markets as the global economy shows signs of slowing and the Federal Reserve slowly normalizes interest rates." We quote from the Journal and take a look at how cash has done below, and we also review our latest Weekly Portfolio Holdings data.

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Over this past weekend, J.P. Morgan became the first major manager of European money market funds become fully compliant with the new European Money Fund Reforms, which go live on Jan. 21, 2019. J.P. Morgan Global Liquidity posted a brief, "Important announcement for Global Liquidity clients: European Money Market Fund Regulations," which tells us, "J.P. Morgan Global Liquidity's implementation of the European Money Market Funds Regulations is now complete on the Luxembourg domiciled Global Liquidity funds. J.P. Morgan Global Liquidity is committed to ensuring that investors have the best experience. Please reach out to us if we can be of any assistance." (NOTE: Crane Data is closed Wednesday, 12/5, due to the National Day of Mourning honoring President George H. W. Bush. Our News, Link of the Day, and MFI Daily publication will be back tomorrow.)

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Kiplinger's Personal Finance's John Waggoner writes on "6 Ways to Improve Your Yield on Cash," which gives a general overview of strategies and tips for retail liquidity investors. The article tells us, "Yields on most savings vehicles, such as bank deposit accounts and money market mutual funds, track the Federal Reserve's federal funds rate. For seven miserable years, from 2008 to 2015, the fed funds rate was tantamount to zero -- and that's about what you got from your savings. As the Fed has raised its benchmark rate, savings rates have risen with it." They quote CFP Jonathan Pond, "This is a huge revelation to my clients.... They are actually earning money on cash."

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The Investment Company Institute released its latest weekly "Money Market Fund Assets" report and its latest monthly "Trends in Mutual Fund Investing" reports yesterday. The former shows MMF assets rising again in the latest week, while the latter shows a $21.4 billion increase in money market fund assets in October to $2.885 trillion, which follows a $3.4 billion decrease in Sept., a $31.6 billion increase in August, a $14.9 billion increase in July, and a $30.1 billion drop in June. In the 12 months through Oct. 31, money fund assets have increased by $145.7 billion, or 5.3%. (Month-to-date in November through 11/28, assets have increased by $37.1 billion, $8.5 billion of which is from Prime MMFs, according to our MFI Daily.) ICI also released its latest Portfolio Holdings totals, which show a jump in Reop and Treasuries in October. We review ICI's Assets, Trends and latest Portfolio Composition statistics below.

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Federal Reserve Chairman Jerome Powell spoke yesterday on "The Federal Reserve's Framework for Monitoring Financial Stability," and he mentioned money market funds more than once for the first time during his tenure. He says, "For seven years during the crisis and its painful aftermath, the Federal Open Market Committee (FOMC) kept our policy interest rate unprecedentedly low--in fact, near zero--to support the economy as it struggled to recover.... [A]bout three years ago the FOMC judged that the interests of households and businesses, of savers and borrowers, were no longer best served by such extraordinarily low rates. We therefore began to raise our policy rate gradually toward levels that are more normal in a healthy economy. Interest rates are still low by historical standards, and they remain just below the broad range of estimates of the level that would be neutral for the economy that is, neither speeding up nor slowing down growth."

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Saturday's San Francisco Chronicle featured the article, "Here's something most brokerage firms would rather you ignore," which discusses brokerage sweep yields. They write, "Most brokerage firms have found a subtle way to squeeze money out of their customers. The trick: switching their sweep accounts from higher-yielding money market mutual funds to lower-yielding bank accounts. Sweep accounts are the places within a brokerage account where cash from dividends, interest, stock sales and other transactions accumulates. When investors buy stock or other securities, it comes out of the sweep account automatically." We quote from this piece, as well as a Bloomberg article on European Money Fund Reforms, below.

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The Securities and Exchange Commission released its latest "Money Market Fund Statistics" summary last week (it was posted yesterday). It shows that total money fund assets rose by $8.2 billion in October to $3.164 trillion. Prime MMFs dipped $3.1 billion to $743.3 billion, while Govt & Treasury funds increased $8.3 billion to $2.282 trillion. Tax Exempt funds rose $2.9 billion to $138.1 billion. Yields rose for Prime, Government and Tax Exempt MMFs in the latest month. The SEC's Division of Investment Management summarizes monthly Form N-MFP data and includes asset totals and averages for yields, liquidity levels, WAMs, WALs, holdings, and other money market fund trends. We review their latest numbers below.

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Several articles and papers published last week discuss the growing attractiveness of cash vs. other asset classes. These include: MarketWatch, which writes, "Goldman Says Cash Will Be King;" Bloomberg, which posted the opinion piece, "Cash Rules Everything Around the Bond Markets;" and J.P. Morgan Securities, which discusses the topic in its "Short-Term Fixed Income 2019 Outlook." We review these "cash is back" stories below, and we also review the latest on pending European Money Fund Regulations and quote from a BlackRock publication on "Preparing for European Money Market Fund Reform." (Note: European regulators also finally rejected the use of the "reverse distribution mechanism," or RDM, which allowed for share cancellations in funds with negative yields, too. See below or see the FT's article.)

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This month, Bond Fund Intelligence interviews Randall Bauer, Senior Vice President & Senior Portfolio Manager with Federated Investors. Bauer is Head of Federated's Structured Finance & Low-Duration Strategies Group and manages the $3.6 billion Ultrashort Bond Fund and the $1.3 billion Short-Term Income Fund. He discusses the ultra-short sector, strategies and supply, and maintaining a "balanced risk profile." Our Q&A follows. (Note: This profile is reprinted from the November issue of our Bond Fund Intelligence publication. Contact us if you'd like to see the full issue, or if you'd like to see our BFI XLS performance spreadsheet, our BFI Indexes and averages, or our most recent Bond Fund Portfolio Holdings data set, which will be published Monday.)

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