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 Sept. 27) includes Holdings information from 61 money funds (up 1 from a week ago), or $3.361 trillion (up from $3.091 trillion) of the $6.791 trillion in total money fund assets (or 49.5%) 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 and our Sept. 12 News, "September Money Fund Portfolio Holdings: Treasuries Jump; Repo Slides.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.494 trillion (up from $1.342 trillion a week ago), or 44.4%; Repurchase Agreements (Repo) totaling $1.312 trillion (up from $1.169 trillion a week ago), or 39.0%, and Government Agency securities totaling $280.1 billion (up from $259.5 billion), or 8.3%. Commercial Paper (CP) totaled $104.9 billion (down from a week ago at $109.5 billion), or 3.1%. Certificates of Deposit (CDs) totaled $62.6 billion (down from $68.6 billion a week ago), or 1.9%. The Other category accounted for $76.4 billion or 2.3%, while VRDNs accounted for $31.7 billion, or 0.9%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.494 trillion (44.4% of total holdings), Fixed Income Clearing Corp with $389.9B (11.6%), the Federal Home Loan Bank with $197.4 billion (5.9%), the Federal Reserve Bank of New York with $130.1B (3.9%), JP Morgan with $98.7B (2.9%), BNP Paribas with $81.9B (2.4%), Citi with $73.0B (2.2%), Federal Farm Credit Bank with $65.7B (2.0%), RBC with $55.0B (1.6%) and Goldman Sachs with $52.1B (1.6%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($259.2B), Goldman Sachs FS Govt ($242.0B), Fidelity Inv MM: Govt Port ($234.1B), JPMorgan 100% US Treas MMkt ($223.6B), BlackRock Lq FedFund ($169.0B), State Street Inst US Govt ($155.9B), Morgan Stanley Inst Liq Govt ($145.4B), Fidelity Inv MM: MM Port ($137.3B), BlackRock Lq Treas Tr ($131.1B) and Dreyfus Govt Cash Mgmt ($129.4B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
In other news, The Wall Street Journal writes "That 5% CD Is a Great Deal -- Until the Bank Calls It Back," which tells us, "The era of 5% cash returns is ending early for some investors. Before the Federal Reserve began cutting rates in September, banks offered certificates of deposit promising high yields for locking up cash years into the future. The highest-yielding ones, with returns in excess of 5%, had features allowing the bank to 'call' them before they mature, handing back the cash and accrued interest. Those features got little attention when rates were rising because banks weren't about to call their CDs and borrow money at even higher rates."
The piece explains, "Now, banks including JPMorgan Chase and U.S. Bank are calling back more high-yielding CDs before they mature to save on interest as rates begin to fall, according to people familiar with the matter. In the rush to lock in easy returns, many everyday investors likely purchased callable CDs without understanding what they were signing up for, according to Kathy Jones, chief fixed-income strategist at Charles Schwab."
It states, "Most CDs aren't callable, but the ones that are typically offer the highest rates. Advertised yields on callable CDs tend to be about 0.4% higher than noncallable CDs with the same duration, according to deposit research firm Curinos. They are generally sold through brokerages such as Fidelity and Charles Schwab, which offer them on behalf of banks. About 18% of CDs bought and sold through Fidelity this year were callable, according to the brokerage."
The Journal says, "Savers poured more than $650 billion into brokered CDs since rates started rising in 2022, hoping to lock in risk-free returns, which peaked above 5%. The amount of brokered deposits in the banking system more than doubled in the past two years, according to FDIC data. Many regional banks loaded up on high-cost brokered deposits to ride out the banking crisis of 2023. Unlike traditional CDs sold directly by retail banks to customers, brokered deposits are usually managed by bookkeeping teams at the bank that are more focused on keeping costs low than fostering long-term relationships."
It adds, "What happens to your money after a CD gets called depends on your brokerage and its default settings. One option is to set up your account so that deposits go into a money-market account, which can still offer a competitive return on uninvested cash. With interest rates falling, it pays to quickly decide where to reinvest your funds. Look for other investments, such as noncallable CDs, Treasurys or high-yield savings accounts. You'll likely need to reinvest at a lower rate unless you're willing to explore riskier investments like corporate bonds or municipal bonds. As Jones said: '5% money with no risk is gone.'"
Finally, the Federal Reserve Bank of New York published a Liberty Street Economics blog titled, "Are Nonbank Financial Institutions Systemic?" It states, "Recent events have heightened awareness of systemic risk stemming from nonbank financial sectors. For example, during the COVID-19 pandemic, liquidity demand from nonbank financial entities caused a 'dash for cash' in financial markets that required government support. In this post, we provide a quantitative assessment of systemic risk in the nonbank sectors."
The post explains, "Even though these sectors have heterogeneous business models, ranging from insurance to trading and asset management, we find that their systemic risk has common variation, and this commonality has increased over time. Moreover, nonbank sectors tend to become more systemic when banking sector systemic risk increases."
It adds, "The systemic risk of diverse nonbank sectors has common variation that increases when banking sector systemic risk increases, consistent with recent crisis episodes where both bank and nonbank sectors have become stressed. In future work, we plan to explore the robustness of these findings to other measures of systemic risk."
