Daily Links Archives: October, 2024
Crane 100 MF Index Dips to 4.69%
Money fund yields slid 4 basis points to 4.69% on average for the week ended Friday, Oct. 11 (as measured by our Crane 100 Money Fund Index, an average of 7-day yields for the 100 largest taxable money funds), after falling 2 bps the week prior and 18 bps two weeks prior. Yields were 4.75% on 9/30, 5.10% on 8/31, 5.13% on 7/31 and 6/28, 5.14% on 5/31, 5.13% on 4/30, 5.14% on 3/31 and 2/29/24, 5.17% on 1/31/24, 5.20% on 12/31/23, 4.94% on 6/30/23, 4.61% on 3/31/23 and 4.05% on 12/31/22. Yields should continue to bottom out as they digest the final remnants of the Fed cut, then they should stabilize until the next cut. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 662), shows a 7-day yield of 4.59%, down 4 bps in the week through Friday. (Five weeks prior was the first time our Crane MFA fell below 5.0% since July 2023.) Prime Inst money fund yields were down 4 bps at 4.79% in the latest week. Government Inst MFs were down 5 bps at 4.69%. Treasury Inst MFs were down 5 bps at 4.64%. Treasury Retail MFs currently yield 4.43%, Government Retail MFs yield 4.40%, and Prime Retail MFs yield 4.57%, Tax-exempt MF 7-day yields were up 10 bps to 2.72%. Assets of money market funds fell by $579 million last week to $6.794 trillion according to Crane Data's Money Fund Intelligence Daily. Assets reached its record high Thursday Oct. 10 at $6.823 trillion. For the month of October, MMF assets have increased by $29.4 billion, after increasing by $149.8 billion in September. Weighted average maturities were up 1 day at 34 days for the Crane MFA and up 2 days at 34 days for the Crane 100 Money Fund Index. According to Tuesday's Money Fund Intelligence Daily, with data as of Friday (10/11), 100 money funds (out of 780 total) yield under 3.0% with $98.0 billion in assets, or 1.4%; 49 funds yield between 3.00% and 3.99% ($57.6 billion, or 0.8%), 625 funds yield between 4.0% and 4.99% ($6.428 trillion, or 94.6%) and just 6 funds now yield 5.0% or more ($210.3 billion, or 3.1%). Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was one basis point lower to 0.51%, after dropping 2 basis points the previous week. The latest Brokerage Sweep Intelligence, with data as of Oct. 11, shows that there were two changes over the past week. Ameriprise Financial Services lowered rates to 0.35% for all accounts between $100K and $249K, to 0.50% for all accounts between $250K and $499K, to 0.65% for all accounts between $500K and $999K, and lowered rates to 1.69% for accounts between $1 million and $4.9 million, they also lowered rates to 1.99% for accounts of $5 million and greater. Merrill Lynch lowered rates for a third week in a row for their advisory accounts, now at 4.73% (down 5 bps). Three of the 10 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. (Note: Three weeks prior we added advisory rates to Brokerage Sweep Intelligence for Merrill Lynch and Morgan Stanley.)
UBS Files to Liquidate Tax-Free Fund
A Prospectus Supplement filing for UBS Tax-Free Preferred Fund (& Reserves) states, "This supplement announces the planned liquidation in December of each of UBS Tax-Free Preferred Fund and UBS Tax-Free Reserves Fund and updates certain information contained in the Prospectus and SAI. Upon the recommendation of UBS Asset Management (Americas) LLC ('UBS AM'), each Fund's investment adviser/administrator, the Board of Trustees of UBS Series Funds has approved the liquidation of each Fund pursuant to a Plan of Liquidation. Accordingly, on or about October 18, 2024, shares of each Fund will no longer be offered for purchase, and all shares of each Fund will be liquidated on or about December 13, 2024." It explains, "On or about the Liquidation Date, each Fund will be liquidated, and any assets of the Fund will be paid in cash to shareholders remaining in the Fund. On or about the Liquidation Date, the Trust will distribute pro rata to each Fund's shareholders of record as of the close of business on the Liquidation Date all of the remaining assets of the Fund, after paying, or setting aside the amount to pay, any liabilities. UBS AM, and not a Fund, will bear the usual expenses incurred in connection with the carrying-out of a Plan (for example, the costs of preparing and sending this prospectus supplement and the costs of preparing and making certain related regulatory filings); however, expenses incurred by a Fund in the ordinary course during the liquidation, such as transaction costs, will be borne by the Fund." The filing also says, "At any time prior to the Liquidation Date, shareholders may redeem their shares of a Fund and receive the net asset value thereof, as provided in the Fund's prospectus.... If a shareholder remains invested in a Fund as of the Liquidation Date, the shareholder’s shares will be redeemed automatically, on or promptly after the Liquidation Date, at net asset value per share as of the Liquidation Date. Each Fund seeks to maintain a stable $1.00 net asset value per share, although there is no assurance that a Fund will be able to do so. Redemption of shares by a shareholder as part of a liquidation generally." For more on recent liquidations, see these Crane Data News stories: "Alight Money Fund Liquidates; Bloomberg Law on Brokerage Sweep Suits (9/19/24), "Dreyfus NY Muni MMF Liquidating" (8/14/24), "Invesco Files to Liquidate Prime Inst MMFs; UBS MF Converting to Retail" (6/13/24) and "DWS Liquidating ESG Liquidity Fund, 7th Prime Inst to Exit; MM Basics" (5/22/24).
State Street Looks at Blockchain MMFs
An article published on the website Coinspeaker, titled, "State Street Explores Blockchain Solutions for Bonds and Money Market Funds," states, "State Street ... is exploring using blockchain technology to tokenize bonds and money market funds. The move comes as traditional financial institutions increasingly recognize the potential of blockchain to transform outdated financial systems. According to a Financial News report, citing an interview with the company's chief product officer, Donna Milrod, both projects are still in their initial stages and are expected to run through part of next year as the firm continues its push toward digital innovation. Milrod noted that financial trading firms often need to liquidate money market fund holdings to generate cash for trade margins. However, by tokenizing these funds, State Street seeks to streamline the process for users, allowing crypto tokens to be used as collateral without requiring redemption." They quote Milrod, "We're working towards building tokenized collateral that can serve as a variation or initial margin for trading. By using digitized funds, the process of posting collateral could become faster and less cumbersome." The piece continues, "The State Street executive also emphasized that tokenization is not just about operational efficiency, it can potentially create commercial value. She pointed to the 2022 liability-driven investment (LDI) crisis as an example of how tokenized collateral could have alleviated financial stress. In that situation, pension funds were forced to liquidate assets to cover margin requirements. She said tokenized money market funds could have offered a more flexible and less disruptive alternative." It adds, "The firm sees tokenized collateral as an essential step forward in improving trading processes and reducing operational costs. The financial services company is not alone in exploring blockchain's benefits for traditional finance. Other major players, such as BlackRock and JPMorgan, have also been experimenting with tokenized assets. Earlier this year, BlackRock launched a blockchain-based fund in March, which attracted approximately $240 million in investment within its first week. In July, Coinspeaker reported that the fund, dubbed BUIDL, was inching closer to hitting $500 million in locked funds. Similarly, JPMorgan has been using digitized money market funds as collateral and has even developed its own stablecoin, JPM Coin, to facilitate digital asset transactions."
WisdomTree Links Money Fund to Debit
A press release titled, "WisdomTree Prime Unveils New Earn-Until-You-Spend Functionality with Money Market Fund," tells us, "WisdomTree, Inc. (WT), a global financial innovator, ... announced the ability for users to select the WisdomTree Government Money Market Digital Fund (WTGXX) as a spending source for their WisdomTree Prime Visa Debit Card. While, traditionally, a low to no yield checking account is used to fund debit card spend, WisdomTree Prime users can now tap their yield bearing money market fund balances to fund debit card spending. WTGXX investors can earn income, with a current 7-day yield of 4.60% until the WTGXX shares are sold to fund spending, strengthening the connection between spending and yield-bearing investments." It explains, "WisdomTree Prime connects a liquid on-chain investment to spending capabilities, which unlocks utility of real world asset (RWA) tokenization in a new, unique way for eligible customers. Consumers can get the potential benefits of their own cash via an investment in WTGXX, all within WisdomTree Prime's modern platform that integrates saving, spending and investing to offer greater control and choice in their financial lives." Will Peck, Head of Digital Assets at WisdomTree, comments, "The purpose of WisdomTree Prime from its genesis has always been to empower consumers with choice. In this case, rolling out the capability to link our money market Digital Fund to our debit card gives users choice in how they put their money to work. We all have a traditional checking account that generally isn't doing us any favors. By connecting a yield-earning asset directly to our spending functionality, users can fund their daily purchases all within the app with the funding mechanism potentially earning yield every single day via a WTGXX investment until the investment is sold to facilitate spending." The release adds, "Additional products and capabilities are scheduled to become available within the app on a rolling basis. For more information on the WisdomTree Prime Visa Debit Card available through WisdomTree Prime, please visit wisdomtreeprime.com. WisdomTree Prime is currently available in the Apple App Store and Google Play across 45 states in the U.S." For more, see these Crane Data News stories: "WisdomTree Connect Launched" (9/24/24) and "WisdomTree Launches Digital Govt MMF; Tradias Tokenizes First Euro MF" (2/26/24).
JPM Morgan Money Adds GLMX
A press release titled, "J.P. Morgan Asset Management Enhances Morgan Money with Expanded Access to Diverse Asset Classes and subtitled, "Collaboration with GLMX to offer clients a broader range of money market instruments," explains, "J.P. Morgan Asset Management ... announced an enhancement to its open architecture, short-term investment management platform, Morgan Money, through a strategic partnership with GLMX, a global money market trading platform. Morgan Money clients can now seamlessly access GLMX's advanced money market trading technology directly on Morgan Money. The integration will broaden short-term investment options and offer a comprehensive suite of money market instruments, including money market funds, repurchase agreements, time deposits, CDs, CP, and government securities." Paul Przybylski, Head of Product and Morgan Money for Global Liquidity at J.P. Morgan Asset Management, comments, "Morgan Money clients will now have access to a wider range of short-term investment options while also benefiting from our cutting-edge research and analysis tools. This collaboration underscores our commitment to providing clients with innovative solutions that enhance their investment capabilities and operational efficiency." The release continues, "Morgan Money is a global trading platform designed to offer robust short-term investment management solutions. Tailored for institutional investors, Morgan Money enables efficient liquidity and cash investment management, helping clients achieve more with fewer resources. The platform, which has $313 billion in AUM as of 6/30/2024, is committed to innovation and consistently strives to deliver an exceptional client experience, making it a forward-looking solution in the realm of treasury and cash management." GLMX CEO Glenn Havlicek adds, "Cash as an asset class and access to diverse liquidity pools in a single application are consistent themes we hear across the global front-end markets. This collaboration with J.P. Morgan Asset Management is a result of investors' desire to access the entire investible universe of short-term instruments with a seamless experience. We bring GLMX's $3 trillion ecosystem to J.P. Morgan's client base as we seek to collaborate with industry leaders to provide innovative and easily accessible solutions for our collective clients."
MMF Yields, Sweep Rates Creep Lower
Money fund yields slid 2 basis points to 4.73% on average in the week ended Oct. 4 (as measured by our Crane 100 Money Fund Index, an average of 7-day yields for the 100 largest taxable money funds), after falling 18 bps the week prior. Yields were 5.10% on 8/31, 5.13% on 7/31 and 6/28, 5.14% on 5/31, 5.13% on 4/30, 5.14% on 3/31 and 2/29/24, 5.17% on 1/31/24, 5.20% on 12/31/23, 4.94% on 6/30/23, 4.61% on 3/31/23 and 4.05% on 12/31/22. Yields should continue to inch lower as they digest the final remnants of the Fed cut, then they should stabilize until the next cut. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 655), shows a 7-day yield of 4.63%, down 3 bps in the week through Friday. (Four weeks prior was the first time our Crane MFA fell below 5.0% since July 2023.) Prime Inst money fund yields were unchanged at 4.83% in the latest week. Government Inst MFs were down 1 bp at 4.74%. Treasury Inst MFs were down 5 bps at 4.69%. Treasury Retail MFs currently yield 4.47%, Government Retail MFs yield 4.45%, and Prime Retail MFs yield 4.60%, Tax-exempt MF 7-day yields were down 34 bps to 2.62%. Assets of money market funds rose by $4.0 billion last week to $6.795 trillion according to Crane Data's Money Fund Intelligence Daily. Assets reached its record high Thursday Oct. 3 at $6.816 trillion. For the month of October, MMF assets have increased by $30.0 billion, after increasing by $149.8 billion in September. Weighted average maturities were up 1 day at 33 days for the Crane MFA and up 1 day at 32 days for the Crane 100 Money Fund Index. According to Monday's Money Fund Intelligence Daily, with data as of Friday (10/4), 107 money funds (out of 773 total) yield under 3.0% with $111.2 billion in assets, or 1.6%; 36 funds yield between 3.00% and 3.99% ($35.8 billion, or 0.5%), 613 funds yield between 4.0% and 4.99% ($6.396 trillion, or 94.1%) and just 17 funds now yield 5.0% or more ($251.5 billion, or 3.7%). Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was down (2 bps) at 0.52% after dropping 8 basis points the previous week. The latest Brokerage Sweep Intelligence, with data as of Oct. 4, shows that there were two changes over the past week. Raymond James lowered rates to 0.20% for all accounts up to $99K, to 0.30% for all accounts between $100k and $249K, to 0.65% for all accounts between $250K and $999K, and lowered rates to 2.00% for accounts between $1 million and $9.9 million, they also lowered rates to 2.75% for accounts of $10 million and greater. Merrill Lynch lowered rates for a second week in a row for their advisory accounts, now at 4.78% (down 4 bps). Three of the 10 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. (Note: Two weeks prior we added advisory rates to Brokerage Sweep Intelligence for Merrill Lynch and Morgan Stanley.)
Barron's: Too Late to Get Out of MMFs
Barron's tells us it's, "Time to Get Out of Money-Market Funds? Why It May Already Be Too Late." They write, "The 'cash is trash' talk is back. What's different is that money-market rates were near zero when that phrase was last heard. But it's being reprised now that the Federal Reserve has begun bringing down its key policy interest rate from over 5%, the highest in over a decade and a half. With the Fed projecting further rate reductions to around 3.4% by the end of 2025, from the current target range of 4.75% to 5%, and financial-futures market pricing in even steeper cuts, the clarion call of financial advisors is to get out of money-market funds, certificates of deposit, and Treasury bills before it's too late." But the piece explains, "Well, it may be already too late. The bond market has already priced in anticipation of sharp Fed rate reductions -- perhaps too much so. A five-year Treasury note yield of 3.77%, well below the 4.60% from the Fidelity Government Money Market fund, effectively prices in rate cuts reflected in the federal-funds futures market." Barron's adds, "All of which suggests that the advice to flee cash equivalents may be ill-timed, either because bond yields have already fallen ahead of Fed rate cuts or because yields may rebound from here.... The public is also sitting on nearly $6.5 trillion in money-market fund assets, a record, despite anticipating lower rates ahead.... While money-market funds will see their returns reduced by Fed rate cuts, closed-end funds should benefit. Unlike more familiar mutual funds and ETFs, CEFs issue a set number of shares, which trade on exchanges, above or (more often) below their net asset values. Most CEFs also utilize leverage—they borrow, frequently at costs linked to short-term market rates. Fed rate cuts should trim their financing costs while boosting the value of their investment portfolios."
Coindesk on Aptos, Franklin Onchain
Coindesk writes "Franklin Templeton Adds Aptos Blockchain to Support Tokenized Money Market Fund." They explain "Aptos (APT), the Layer 1 blockchain inspired by the discontinued Diem (formerly Libra) blockchain developed by Meta, has become the latest network where investors can trade shares of Franklin Templeton's OnChain U.S. Government Money Market Fund (FOBXX). The fund, which is the second-largest tokenized fund on the market with a $435 million market cap, is already available on Ethereum via Arbitrum, Stellar and Polygon as well as Avalanche." The brief quotes Bashar Lazaar, Head of Grants and Ecosystem at Aptos Foundation, "Franklin Templeton's willingness to innovate in the name of a truly decentralized and accessible financial future is inspiring. To reach that future, we need to connect not just the TradFi and DeFi worlds, but EVM and non-EVM networks as well. Integrating the Benji Investments platform with the Aptos Network is a massive step in the right direction and we look forward to welcoming them to the Aptos ecosystem."
MMFs Heading to Nashville for AFP
Money market mutual fund distributors and cash managers will be travelling to Nashville, Tenn. for AFP 2024, the Association for Financial Professionals' big annual gathering of corporate treasurers, which takes place October 20-22. AFP is the largest gathering of corporate investors in the country, attracting over 5,000 treasury management professionals, as well as a host of large banks and institutional money fund managers. Though the exhibit hall and parties are where the action is (for the cash world anyway), there are a few sessions that involve money funds and cash investing. (See the Session Explorer here.) On Monday, Oct. 21, sessions of interest include: "The Liquidity Lowdown: Powell Mountain Tucked Between Macro Clouds," which features James Griffin of KKR & Co. L.P., Patrick O'Callaghan of Goldman Sachs, Cameron Bowen of Salesforce, and Nicole Smith of Visa; "Elevating Investments Strategy While Prioritizing Safety And Liquidity," which features Brandon Hillstead of Autodesk Inc., Julie Mingus of Cinemark Holdings, LLC, Erica MacMillan of The Wendy's Company and Vanessa McMichael of Wells Fargo Securities; "From Strategy To Execution: Best Practices For Corporate Investments," which features, Bridget Rodnick of BioMarin Pharmaceuticals, Jessica Siu of Dropbox, and Sara Flour of RBC Global Asset Management; and, "Rethinking Treasury's Global And Geopolitical Approach To Counterparty Risk Management," which features Anshul Patni of Bakelite Synthetics, Sebastian Ramos of ICD, and Bill Lundeen of Indivior. On Tuesday, Oct. 22, sessions include: "`Choose Your Own Adventure: Navigating The Resilient Portfolio," which features Kevin Fitzgerald of BlackRock, William Brewer of Bristol Myers Squibb, and Matthew Daniel of FedEx Corporation; and, "Mastering Liquidity In A Fluid Rate Environment <b:>`_" which features Jessie DiMeglio of Allegis Group, Sara Teyema, CTP of Inova Health System, Christy Williamson of Phillips 66, and Cory Paape of Truist. Look for us at Booth #434 and we look forward to seeing you all in Nashville! Finally, thank you once more to those who supported last month's European Money Fund Symposium, which took place Sept. 19-20 in London, England. Mark your calendars for our next live event, our "basic training" Money Fund University, which will take place December 19-20, 2024 at The Renaissance Hotel in Providence, R.I <b:>`_. Crane Data is also preparing the preliminary agenda for our next Bond Fund Symposium, which will be held March 27-28, 2025, at the Hyatt Regency Hotel in Newport Beach, Calif. We'll also soon be making plans for our next "big show," Money Fund Symposium, which will be held June 23-25, 2025, at The Renaissance Boston Seaport in Boston, and for next year's European Money Fund Symposium, which will be held Sept. 25-26 in Dublin, Ireland. Watch for details on these shows in coming weeks and months.
CNBC Pro Explains Money Funds' 'Lag'
CNBC Pro writes, "This is the cost of carrying too much cash, according to Wells Fargo." It tells us, "Americans' love affair with cash may be costing them in the long run, according to Wells Fargo. The bank believes 'the time may have come' to start pulling money out of cash vehicles like money markets, high-yield savings accounts and other short-term instruments. A record $6.42 trillion is sitting in money market funds, as of Wednesday, according to the Investment Company Institute." The article continues, "While it has been a great place to park cash and earn attractive yields, those rates are coming down now that the Federal Reserve has started cutting rates. The seven-day annualized yield on the Crane 100 list of the 100 largest taxable money funds is currently 4.75%. The last time funds yielded less than 5% was July 2023, according to Peter Crane, founder of Crane Data, a firm that tracks money markets. The yield was 5.2% in November, the highest since Crane started tracking yields in 2006, although they were over 6% for a period in 2000-2001 and in the high teens in the 1970s, he said." It adds, "The move in money market fund yields typically lag federal funds rate cuts. It usually takes about a month to fully digest Fed moves, Crane said. That delay is attractive for institutional investors. During Fed rate decreases, direct money market investments, like Treasury bills, will absorb the cuts quicker than money market funds. 'Of course, so much cash is coming in so fast that the rates will drop faster,' Crane noted. 'The new cash must be reinvested at the new lower levels, but T-bill, repo [repurchase agreement] and CD investors are flocking to MMFs while they still hold some of the older, higher yielding stuff.'"
Barron's Says "Cash's Heyday Is Over"
Barron's says, "Cash's Heyday Is Over. Investors Need to Move On." The article comments, "Whether the Federal Reserve delivers another outsize rate cut at its next meeting or not, the time has come for investors to move out of big holdings of cash. Interest rates on money-market funds and other safe vehicles are falling.... Diminishing inflation gives the Fed more leeway to cut aggressively. After the numbers came out, the CME Group's FedWatch tool, which tracks interest-rate futures, showed 53% of odds of a half-point cut in November, up from 49% odds on Thursday. That would come on the heels of the half-point cut the Federal Open Market Committee delivered at its September meeting as it shifted from battling inflation to supporting employment and averting an economic slowdown." It tells us, "Rates have already begun to fall on some savings accounts and certificates of deposit. And yet, investors continue to pile into money-market funds. Total money-market-fund assets increased by $120.80 billion to $6.42 trillion for the week ended Wednesday, according to the Investment Company Institute. That is likely at least in part because yields are still attractive, but they will become less so over time. Money-fund yields have fallen from 5.06% on Sept. 18, when the Fed cut rates, to 4.76% as of Thursday, as measured by the Crane 100 Money Fund Index, Crane Data's average of the 100 largest taxable money funds. They should drift lower still over the next few weeks as the cut works its way through money-market funds, before pausing around 4.60% before the Fed moves again, says Peter G. Crane, president and publisher of Crane Data." The piece quotes, "'It's not too late' for investors to trim their cash exposure, says Gargi Chaudhuri, chief investment and portfolio strategist for the Americas at BlackRock. If investors are too slow to move, however, they'll miss out on today's opportunities in bonds and fixed income."
