Reuters writes on "The Peculiar '​No Show' from US Cash Funds." The article states, "A flood of money was expected to cascade from U.​S. cash funds to riskier assets as interest rates began to tumble. But so far, this flood has been missing in action, raising the question of whether this is a sign of extreme caution, plain inertia or something else. The brimming bunkers of cash held by U.​S. households and companies have never been higher, inflated by monetary and fiscal responses to the pandemic shock and then cosseted by rising interest rates." It continues, "​It was presumed that tempting this cash back into bonds and stocks would only require an initial Federal Reserve interest rate cut, with the promise of an extended easing cycle and plain sailing ahead for the economy. Both scenarios seem to be materializing, and yet cash coffers are still swelling. Assets under management at cash-​like U.​S. money market funds -- which are invested mostly in short-​term government bills with maturities of less than a year -- topped $​6.​5 trillion for the first time this month. That'​s some $​200 billion higher than just before the Fed'​s 50 basis point rate cut last month, almost $​1 trillion higher than this time last year, and twice the pre-​pandemic level five years ago." Reuters adds, "Of course, the ongoing expansion of money fund assets over the past 18 months is partly just reinvestment, as these funds have enjoyed the heftiest returns in almost 20 years, as well as a whoosh of inflows from checkable deposits following the Silicon Valley Bank bust in the spring of 2023. That said, signs remain scant that these cautious savers will be chasing riskier returns any time soon. And what'​s the rush? The returns offered by these funds are still attractive, especially if you'​re wary of any economic or political disturbances ahead.... Perhaps many of these money fund investors simply aren'​t as interest rate sensitive as many previously believed."

A posting on the Fedweek website, tited, "Study Stresses Need for Cash Reserves by Retirement Savers," tells us, "A study stresses the need for retirement savers to have a reserve of readily available cash to cover a major unexpected expense, saying the alternative typically is to reduce savings toward retirement or increase credit card debt. Increasing credit card debt is itself tied to a decrease in savings toward retirement, says the Employee Benefit Research Institute in a study of spending and savings by public sector participants in defined contribution plans such as the federal TSP." The story explains, "​The report expanded on an earlier study of responses by private sector employees to a spending '​spike,' defined as an expense of at least 25 percent in a month above the median of the prior 12 months. It said that 29 percent of households have had such an expense within the prior 12 months, with about half of those having had more than one. Such surges -- for example, a major car or home repair -- '​can play havoc on a household'​s finances and possibly lead to the need to access more funds,' it said." They quote, "These spending spikes have a clear impact on the likelihood of public-​sector DC plan participants taking a plan loan and increasing their credit card debt in the year of the spike. Of those with a spending spike in the analysis year, 7.​0 percent took a new plan loan and 31.​7 percent increased their credit card debt, compared with 2.​7 percent and 25.​9, respectively, of those without a spending spike in that same year." The piece adds, "It said that of those with insufficient income or cash on hand to handle such an expense, those with lower levels of credit card debt were much more likely to add the expense to that debt than to take out a loan from their retirement savings plan. Those with higher levels of credit card debt were less likely to add it to that debt and more likely to take out a loan."

Invesco asks "What will ongoing Fed rate cuts mean for fixed income?" The piece, written by Matt Brill and Todd Schomberg, tells us, "After being on hold at 5.​5% since July of 2023, the Federal Reserve (​Fed) announced a 50 basis point rate cut in the federal funds rate on September 18. The move shows that the Fed is doing its best to stay in front of often conflicting economic releases. In the following article, the Invesco Fixed Income Investment Grade team discusses the current fixed income landscape, and ideas to take advantage of falling rates." It explains, "This past rate hiking cycle was the fastest on record, and we think they will cut just as quickly. We have been adding some credit risk to the portfolios to take advantage of the expectation of lower rates. Not only should the shape of the curve return to normal, but we expect a parallel shift downward as well, which will likely be good for bond prices overall." The update adds, "The uncertainty in the market combined with attractive yields on short-​term securities made moving out the yield curve a tough decision. We have been expecting flows to come into investment grade asset classes, but it seems everyone was waiting for an all-​clear signal from the Fed. Now that we'​ve seen the first cut, we expect to see a lot of that money move into asset classes with some duration."

The Block writes, "Regulatory uncertainty is a barrier to the institutional adoption of tokenized money market funds: analyst," which tells us, "The risk of adverse regulatory intervention remains a major obstacle to the broader adoption of tokenized money market funds among institutional players, an analyst said. 'Tokenized money market funds are under constant threat of adverse regulatory action, curbing investors’ appetite,' Rho Labs founder Alex Ryvkin told The Block.... 'I can confirm that widespread tokenized RWA-​readiness is, although inevitable, still a couple of years away.' Ryvkin explained that while awareness and interest in tokenized real-​world assets have grown, progress on regulatory clarity and infrastructure development will be necessary before these products achieve mass adoption. He noted that the current adoption stage remains in the '​experimentation phase,' with the usage of tokenized money market products still lagging far behind their traditional finance counterparts." The article comments, "Ryvkin highlighted some recent institutional moves in the space -- including interest in using tokenized assets such as BlackRosk'​s BUIDL token as collateral on crypto derivatives exchanges, such as Deribit.... However, Ryvkin noted that although developments are promising, true adoption requires a foundational infrastructure that is still being built. Ryvkin then pointed to critical steps needed for products like BlackRock'​s tokenized BUIDL fund to move beyond proof of concept and integrate broadly into capital markets." It adds, "BlackRock'​s BUIDL fund is a significant example in the tokenized money market fund space. Launched in March 2024, BlackRock USD Institutional Digital Liquidity Fund (​BUIDL) invests in liquid assets like cash, U.​S. Treasury bills, and repurchase agreements, offering token holders monthly dividend payouts based on daily accruals. The BUIDL fund operates as an ERC-​20 token on the Ethereum blockchain and features a KYC and AML-​compliant '​whitelist' mechanism, allowing tokens to be traded only among addresses approved by the Securitize Markets whitelist. Bank of New York Mellon serves as the custodian of the fund’​s assets and its administrator. Since its launch, BUIDL has reportedly distributed $​7 million in dividends to investors and now manages over $​500 million in assets, making it one of the largest tokenized funds currently trading, according to tracker rwa.​xyz." In related news, see also Bloomberg'​s "Wall Street'​s Tokenized Money-​Market Funds Seek to Take on Tether" and The Wall Street Journal'​s "Federal Investigators Probe Cryptocurrency Firm Tether."

The latest Wells Fargo Daily Short Stuff, written by Vanessa Hubbard McMichael, gives a brief "AFP 2024 Recap" and "corporate investor perspective." She tells us, "We attended the annual AFP conference this week, one of the largest gatherings for corporate professionals in Treasury roles, both moderating a panel and listening to other investment-​related sessions. The focus for our panel was investment policy changes driven by recent economic and market adjustments (​e.​g., inflation, both lower and higher rates, bank counterparty risk/​uninsured bank deposits, prime money market funds, etc.). For the investment panels we listened to, there was a general theme, and this was corporate practitioners discussing how they simultaneously use self-​directed and managed fixed income investment solutions." The piece continues, "While we work with clients to equip them for a self-​directed investment strategy, there can be merits and value for a portion of cash to be externally managed if a corporate organization wants to take on more duration and/​or credit risk but is limited on resources. `​For corporate organizations investing in government securities (​Treasuries, Agencies/​GSEs, and high-​quality SSAs) or high quality credit securities, a self-​directed investment strategy is typically the appropriate course, and we heard this outright supported by practitioners during the conference. While we understand that Treasury staff is typically lean, Treasury staff is closest to the cashflows and is therefore the best suited for understanding the organization'​s investment opportunities, particularly when making decisions around tenor." It adds, "For corporate organizations that want to explore the lower spectrum of the investment grade space, use the outer most bounds of permitted maturity limits or add structured products that require advanced modeling to assess value, these are the instances whereby an externally managed solution makes sense in the absence of internal expertise. As the easing cycle continues and robust interest income weakens, it is going to be increasingly important for corporate organizations to maximize and stabilize investment earnings without stepping beyond risk comfort; a reality discussed by practitioners at the AFP conference. Thus, if we are limited in scope to the amount of credit and duration risk that can be pursued, a self-​directed investment strategy, rather than a fully externally managed one, is the most beneficial way to accomplish this."

Federal Reserve Bank of Dallas President Lorie Logan spoke recently on "Normalizing the FOMC’​s monetary policy tools." She says, "Today, I will return to the topics of money markets and the Fed'​s balance sheet, but from a new perspective as a policymaker and in a very different economic environment.... It'​s sometimes suggested that the reduction in asset holdings works at cross purposes to the strategy of reducing policy restriction by lowering the fed funds target range. I don'​t see it that way, for two reasons. First, we are moving the target range toward neutral from above. The policy rate remains restrictive, which is consistent with also creating restriction by reducing asset holdings. Second, we are now normalizing both of our policy tools. Normalizing the fed funds rate means bringing it down from the elevated levels that were needed to restore price stability and returning to a level that will be consistent with sustaining maximum employment and price stability over time. Normalizing our balance sheet means bringing our asset holdings down from the elevated quantity that was necessary to support the economy during the pandemic and returning to a balance sheet size that will be consistent with implementing monetary policy efficiently and effectively. Those two normalization processes work in tandem and are consistent in my view. A number of other central banks are similarly reducing their asset holdings while lowering their policy rates in response to the changing economic outlook. The normalization process will affect both sides of the Federal Reserve'​s balance sheet. In the rest of my remarks, I will describe key policy considerations that I expect to affect the path of the Federal Reserve'​s liabilities and assets in the long term, as well as some relatively near-​term considerations that may arise along the way." Logan adds, "One sign liquidity remains in abundant supply, and not merely ample, is that money market rates continue to generally run well below IORB. The tri-​party general collateral rate (​TGCR) on repos secured by Treasury securities has been averaging 8 basis points below IORB. Because reserves and Treasury repos are both essentially risk-​free overnight assets -- and reserves are, if anything, more liquid -- the spread of IORB over TGCR indicates reserves remain in relatively excess supply compared with other liquid assets.... And the continuing substantial balances in the Fed'​s overnight reverse repo (​ON RRP) facility provide another sign that liquidity remains more than ample. The ON RRP facility accepts overnight investments from money market funds and certain other market participants at a rate currently 10 basis points below IORB. Thus, the facility reinforces the floor on money market rates created by IORB. Institutional and market frictions can influence investors' choices to place funds in the ON RRP facility versus other instruments. However, should liquidity shortfalls emerge that create meaningful upward pressure on money market rates, I would expect market participants to move cash out of the facility in search of higher returns. For now, the remaining ON RRP balances provide a buffer of additional excess liquidity."

Calastone writes on "The Future of Tokenised Yield-​Bearing Assets as Collateral." They comment, "Yield-​bearing assets like money market funds have long been a staple for investors seeking to manage their short-​term liquidity needs. Particularly for larger corporate and institutional investors, like pension funds, which have limited options for managing cash needs due to constraints on unsecured exposure to bank deposits, money market funds offer an invaluable cash management vehicle, diversifying credit risk and achieving returns aligned with short-​term money market rates. They are designed to be redeemed by investors for cash at short notice, typically offering daily redemptions with same-​day settlement." Calastone continues, "However, money market funds are not typically used as collateral, due to operational and in some regions regulatory barriers, they need to be converted to cash first. Indeed, around three quarters of collateral is posted as cash. But the process for doing so is hobbled by inefficiencies. Tokenisation can simplify it." They add, "If money market funds were tokenised, the investor could simply pledge their tokens to the counterparty as collateral without needing to redeem them for cash first. The assets could be posted to an account in the investors name for the benefit of the receiver of the collateral, meaning the investor retains the yield. When no longer required they are posted back to the main account of the investor -- all executed on a single, efficient set of digital rails. This offers significant benefits to both investors and the whole ecosystem. It makes operations more efficient, because tokenised assets can be transferred between accounts with full transparency to all parties in real time on distributed ledger technology (​DLT) networks."

A press release titled, "Hashnote brings USYC to the Canton Network to offer the first tokenized money market fund with built-​in privacy." It says, "Hashnote, the on-​chain first digital asset manager backed by DRW and Cumberland, and Canton Network, launched by Digital Asset in collaboration with more than 30 financial industry leaders, announce that Hashnote'​s yield-​bearing US Yield Coin (​USYC) is now available on the Canton Network. USYC on Canton benefits from the network'​s unique privacy properties, enabling USYC holders to hold and deliver collateral across the Canton Network without anyone other than the issuer and the holder knowing." Leo Mizuhara, Founder and CEO of Hashnote, comments, "What particularly stands out for us, and for many of our clients, is the privacy of your assets and transactions when using Canton, which can be crucial for trading use cases. The setup allows us to reduce counterparty and settlement risks and optimize capital efficiency without sacrificing privacy. Furthermore, USYC is fully composable on the Canton Network, so participants can create additional utility around USYC by including it in their trading, cash, and risk management workflows." The release states, "Hashnote'​s USYC invests in reverse repo activities on government-​backed bonds. It is designed to offer tokenized short-​term risk-​free rate returns, leveraging the benefits of rapid on-​chain transaction speed, transparency, and composability. USYC'​s AUM is at $​300 million and growing. The Canton Network'​s Global Synchronizer allows risk-​free and privacy-​protected value exchange across apps in the Canton Network via atomic transactions." Eric Saraniecki, Co-​Founder and Head of Network Strategy at Digital Asset, adds, "Access to tokenized real-​world assets on-​chain has been steadily on the rise and we are now seeing demand from institutional investors who want to utilize these assets across daily margin, cash, and risk management activities. Privacy is required to make this a reality, unlocking cash equivalents for use as collateral 24/​7, in real-​time, and connecting Hashnote'​s customers to the largest and most diverse network for tokenized real-​world financial assets. Hashnote is one of the early movers leveraging Digital Asset'​s Canton asset tokenization utility, enabling firms to securely and quickly bring digital assets to institutions connected on the Canton Network. The utility provides an asset registry application with out-​of-​the-​box smart contracts to create tokenized assets with embedded privacy, and a credential management capability to onboard investors, manage permissioning, and ensure direct investor ownership and control over assets."

The New York Times writes, "Money Market Rates Are Lower, Yes. But Compared to What?" Subtitled, "Even with further Fed rate cuts likely, money market funds are a good alternative for stashing cash, and investors are still flocking to them, our columnist says," the piece states, "When money market interest rates broke above 5 percent last year, it was a wake-​up call for many investors who had grown accustomed to getting almost nothing for their money at banks. Hundreds of billions of dollars flowed into the funds, which swelled in size month after month. Now that the Federal Reserve has begun cutting short-​term interest rates -- and money market funds have begun reducing their rates, too -- you may expect that these funds would be less appealing. But nothing could be further from the truth. The 'wall of cash' in money market funds isn'​t flowing into the stock market or other risky investments. It is, for the most part, staying where it is -- and growing larger." It explains, "In fact, cash in money market funds has hit new peaks since Sept. 18, when the Fed reduced its benchmark federal funds rate by half a percentage point to a range of 4.​75 to 5 percent. Meanwhile, rates for the biggest money funds tracked by Crane Data, an independent financial market research firm, have dropped to 4.​68 percent from 5.​06 percent. But $​159.​2 billion flowed into money funds overall through Oct. 17 -- putting their total assets at $​6.​794 trillion. That'​s good news, as I see it. It means that the vast majority of investors are keeping their cash in safe, high-​paying locations -- getting far better yields than most bank accounts offer, and avoiding excessive risk-​taking with money that they presumably can'​t afford to lose in speculative bets. What'​s more, if rates fall further, money market funds are likely to retain a comparative advantage for months to come, pulling in cash because they continue to look better than the alternatives." The article adds, "It'​s often assumed that when the Fed lowers rates, people will pull cash out of money market funds and pour it into the stock market. There'​s scant evidence that this has happened, however, now or in the past. 'It'​s not until rates fall below 3 percent that people start to pull money out of money market funds,' Peter G. Crane, a founder of Crane Data, said in an interview. '​I don'​t see that happening soon. And I don'​t see any big movement from money market funds into the stock market.'"

Wells Fargo hosted its Q3 2024 Earnings Call last week. (​See the release here and the transcript here.) CEO Charlie Scharf comments, "We continue to see more pronounced stress in certain customer segments with lower deposit and asset levels, where inflation has partially offset strong employment and wage growth." CFO Mike Santomassimo tells us, "​Net interest income declined $​233 million or 2% from the second quarter, $​128 million of this decline was due to the increased pricing on sweep deposits and advisory brokerage accounts ... that we highlighted on last quarter'​s call. This was the lowest linked-​quarter decline in net interest income since third quarter 2023, as customer migration to higher yielding deposit products continued to slow and the pace of deposit pricing increases also decelerated. Deposit costs were up 7 basis points in the third quarter with approximately half of this increase driven by the pricing increase on sweep deposits in advisory brokerage accounts. The third quarter increase in deposit costs was lower than the 10 basis point increase in the second quarter and the 16 basis point rise in the first quarter. In response to the Federal Reserve rate cut in September, we have reduced rates on promotional deposit offers in our consumer businesses. Pricing on sweep deposits and advisory brokerage accounts, which are aligned to money market funds, will continue to move in-​line with Fed rate cuts." He also says, "​Wealth and Investment Management revenue increased 5% compared with a year ago, due to higher asset based fees driven by increased market valuations, as well as higher brokerage transaction activity, partially offset by lower net interest income, driven by the increased pricing on sweep deposits in advisory brokerage accounts." See also, MarketWatch'​s "Money-​market funds shed $​6.​5 billion in assets. No, the flood out of cash isn'​t here". It says, "Investors pulled about $​6.​5 billion out of money-​market funds in the past week through Wednesday, according to data from the Investment Company Institute. You could blame the long weekend, or just '​a quirk of the calendar,' where institutional assets in money-​market funds tend to drop around the 15th of each month. But no. This isn'​t the long-​awaited exodus from bulging money-​market funds that many on Wall Street have been anticipating, said Peter Crane, president and CEO of Crane Data. 'Rates would have to drop below 3% or lower,' Crane told MarketWatch on Thursday. And the Fed would need to be done cutting rates too, he said. That'​s because falling rates are actually short-​term positive for money-​market flows, according to Crane, because all of the things money-​market funds compete with, including overnight repos, T-​bills and CDs, tend to see their rates drop, while rates on money-​market funds lag, he said. November and December also tend to be the strongest months for money-​market inflows, Crane said."

BlackRock reported its Q3 2024 Earnings late last week, and, as usual, mentioned cash and money market funds several times on its Q3 earnings call. CFO Martin Small tells us, "Cash management saw net inflows of $​61 billion in the quarter, driven by both US government and international prime funds, and included multiple large new client mandates. Clients recognize the benefits of our scaled and integrated cash offerings, and this is contributing to sizable inflows of BlackRock.... The fourth quarter'​s also been historically strong for inflows, so we'​re staying connected with our clients." CEO Laurence Fink comments, "​Many investors have large cash holdings. Money market industry assets are hitting new records in the quarter, including BlackRock'​s own cash position, which had $​61 billion in net inflows. But investors will have to re-​risk to meet their long-​term return needs.... BlackRock is exceptionally well positioned in front of that $​9 trillion of money market funds across the industry as it makes its way into public and private markets." During the Q&​A, they were asked about flows. Small replies, "With respect to money markets, our business is largely institutional. It'​s been very durable. The $​61 billion of flows that'​s come there I think have been good. The trajectory has been very strong this year.... When we look at it, our money market fund business is at $​850 billion today. It'​s nearly 70% bigger than it was five years ago. Cash is a meaningful part of client portfolios, but we'​re seeing that sort of return to fixed income as well, which has been good for the flow trajectory."

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.)

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).

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."

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).

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."

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 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 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."

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" 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 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. 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."

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