MMF Assets Up in Bad Week
ICI's latest "Money Market Fund Assets" report shows that money fund assets appear to have benefited from the recent stock market turmoil. The release says, "Total money market fund assets increased by $7.91 billion to $2.74 trillion for the week ended Wednesday, January 13, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $8.00 billion and prime funds increased by $3.06 billion. Tax-exempt money market funds decreased by $3.15 billion. Assets of retail money market funds decreased by $2.83 billion to $1.01 trillion. Among retail funds, government money market fund assets increased by $1.02 billion to $356.23 billion, prime money market fund assets decreased by $1.70 billion to $469.40 billion, and tax-exempt fund assets decreased by $2.15 billion to $188.08 billion. Assets of institutional money market funds increased by $10.74 billion to $1.73 trillion. Among institutional funds, government money market fund assets increased by $6.98 billion to $876.20 billion, prime money market fund assets increased by $4.76 billion to $784.54 billion, and tax-exempt fund assets decreased by $1.01 billion to $68.08 billion." Year-to-date in 2016, money fund assets are down $16 billion. (In 2015, money fund assets increased by $26.0 billion, or 1%, after 3 years of 0.5% growth.) In other news, Wells Fargo released its monthly, "Overview, Strategy, and Outlook" portfolio manager commentary, which says, "On December 16, 2008, as it began to realize the magnitude of the financial crisis, the Federal Open Market Committee, which is the monetary policymaking body of the Federal Reserve, established a target range for the federal funds rate of 0.00% to 0.25%, effectively lowering interest rates from 1% to 0%. Exactly seven years later, on December 16, 2015, the FOMC finally felt comfortable enough with the strength of the economy to raise interest rates, nudging its target range up to 0.25% to 0.50%. FOMC members had strongly hinted the move was coming, and after employment data released in November and December confirmed labor market strength, the market largely expected the increase. Of course the market immediately shifted its attention to the timing of the next interest-rate increase. Fed communications have seemed to promise both data dependency and a gradual pace to interest-rate hikes, so all eyes will be back on the data. At the very least, the FOMC seems unlikely to raise rates again at its January meeting, keeping interest rates at this new level, the second-lowest in U.S. history. Beyond that, it depends on the economy."
