Money Market News
The Federal Reserve Bank of New York's Liberty Street Economics blog released an article entitled, "Treasury Bill Supply and ON RRP Investment," which examines shifts in money market fund supply over the past couple of years. It states, "Take-up at the Federal Reserve's Overnight Reverse Repo Facility (ON RRP) increased from a few billion dollars in January 2021 to around $2.6 trillion at the end of December 2022. In this post, based on a recent Staff Report, we explain how the supply of U.S. Treasury bills (T-bills) affects the decision of money market mutual funds (MMFs) to invest at the facility. We show that MMFs responded to a reduction in T-bill supply by increasing their take-up at the ON RRP, helping to explain the increased overall take-up."
Money fund assets jumped $22.3 billion on Monday, breaking the $6.2 trillion level for the first time ever and hitting a record $6.200 trillion, according to Crane Data's Money Fund Intelligence Daily series (as of November 27). Money fund assets have risen by $63.2 billion over the past week and by $159.0 billion in the first 27 days of November. Assets fell by $31.9 billion in October after rising by $93.9 billion in September, $98.3 billion in August and $34.7 billion in July. Year-to-date (through 11/27), money fund assets have increased by $1.009 trillion, or 19.4%. (Note: Please join us for our upcoming Money Fund University in Jersey City, Dec. 18-19. We'll also be hosting our Crane Data Holiday Party alongside MFU, so feel free to drop by the Westin Jersey City on Monday, Dec. 18 from 5:00-7:30pm.)
Yesterday's Wall Street Journal featured an article entitled, "Investors Are Hungry for Risk -- and Holding Record Cash Sums," which was subtitled, "Some analysts see the investor balances in money-market funds as a bullish sign for stocks and bonds." The piece explains, "Stocks and bonds have surged in November. With record investor balances in money-market funds, some analysts are optimistic that they have more room to run.... The S&P 500 is up 8.7% this month, while the Nasdaq Composite has climbed 11%. The yield on the benchmark 10-year Treasury note, which falls as bond prices rise, is down by nearly half a percentage point to 4.483% -- a substantial move in a market where daily moves are measured in hundredths of a point."
J.P. Morgan published its "Short-Term Fixed Income 2024 Outlook" last week, which is entitled, "More of more and less of less." Authors Teresa Ho, Pankaj Vohra and Holly Cunningham tell us, "In contrast to the long end of the Treasury curve, it was a remarkably stable year in the money markets. Despite the regional banking crisis, massive T-bill issuance, finalization of MMF reform, all the while with QT going on in the background, spreads in the money markets traded mostly in a narrow range. That stability underscored the abundance of liquidity still in the financial system, most of which seemed to be sitting in the very front end. Indeed, MMF AUMs grew by nearly $1tn this year, with balances currently registering $6tn, as investors could not ignore the 5% yield on an overnight asset, a dynamic we haven't seen since 2007. To be sure, markets have made use of that liquidity, as Fed ON RRP balances declined by a substantial $1.3tn. It helped too that the Fed was nearing the end of its tightening cycle, giving MMFs a reason to rotate out of the facility and into T-bills. As of the time of writing, usage at the Fed ON RRP has fallen below $1tn.." (Note: JPMorgan's Pankaj Vohra will present the "Instruments of the Money Markets Intro" at our upcoming Money Fund University, which is Dec. 18-19 in Jersey City, NJ.)
The Investment Company Institute published its latest weekly "Money Market Fund Assets" report Wednesday (a day early due to the Thanksgiving Day Holiday), which shows MMF assets rising for the fifth week in a row and hitting yet another new record level. ICI's asset series rose $29.1 billion to $5.763 trillion and have risen $155.5 billion the past 5 weeks (after a drop of $98.8 billion the week ended 10/18). Assets are up by $1.028 trillion, or 21.7%, year-to-date in 2023, with Institutional MMFs up $462 billion, or 15.1% and Retail MMFs up $566 billion, or 33.8%. Over the past 52 weeks, money funds have risen a massive $1.122 trillion, or 24.2%, with Retail MMFs rising by $633 billion (39.3%) and Inst MMFs rising by $489 billion (16.1%). (Note: Please join us for our upcoming Money Fund University in Jersey City, Dec. 18-19. We'll also be hosting our Crane Data Holiday Party alongside MFU, so feel free to drop by the Westin Jersey City on Monday, Dec. 18 from 5:00-7:30pm.)
The U.K.-based publication TMI, or Treasury Management International, recently published the results of a survey sponsored by Northern Trust Asset Management entitled, "Through The Liquidity Lens: Corporate Treasury Trends In Short-Term Investments." The piece summarizes, "Rising rates were the number one concern impacting their short-term investment decisions for 41% of survey respondents, while 15% selected inflation.... ESG and DEI (Diversity, Equity, Inclusion)-driven investments are on the rise. According to the survey findings, 21% currently invest in ESG-focused MMFs and 38% plan to. An additional 22% currently invest in green/sustainable deposits and 42% intend to over the coming 12 months.... Despite the clear benefits, 45% of survey respondents do not use an investment portal. The major reason for not harnessing portal technology is not investing in MMFs (44%), but 13% say resources are also an issue. The most popular portal choice is that provided by banks – with 22% of treasurers leveraging this technology."
The Securities and Exchange Commission's latest monthly "Money Market Fund Statistics" summary shows that total money fund assets decreased by $41.2 billion in October to $6.112 trillion. The SEC shows Prime MMFs jumping $13.9 billion in October to $1.287 trillion, Govt & Treasury funds decreased $62.4 billion to $4.695 trillion and Tax Exempt funds increased $7.3 billion to $130.7 billion. Taxable yields inched higher in October after rising in September. 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. (Month-to-date in November through 11/17, total money fund assets have increased by $83.2 billion to $6.124 trillion, according to our separate, and slightly smaller, MFI Daily series.)
Crane Data is making plans and preparing the agenda for our seventh annual ultra-short bond fund event, Bond Fund Symposium, which will take place March 25-26, 2024 at the Loews Philadelphia Hotel. Crane's Bond Fund Symposium offers a concentrated and affordable educational experience, as well as an excellent networking venue, for bond fund and fixed-income professionals. Registrations are now being accepted ($1,000) and sponsorship opportunities are available. We review the preliminary agenda and details below, and we also give the latest update on our upcoming "basic training" show, Money Fund University, which will be held next month in Jersey City, Dec. 18-19. (We'll also be hosting our Crane Data Holiday Party alongside MFU, so please join us Monday, Dec. 18 from 5:00-7:30pm at the Westin Jeresey City.
The Investment Company Institute published its latest weekly "Money Market Fund Assets" report Thursday, which shows MMF assets rising for the fourth week in a row and hitting yet another new record level. ICI's asset series rose $21.9 billion (after rising $16.9 billion the prior week) to $5.73 trillion. Assets are up by $999 billion, or 21.1%, year-to-date in 2023, with Institutional MMFs up $446 billion, or 15.9% and Retail MMFs up $553 billion, or 33.0%. Over the past 52 weeks, money funds have risen a massive $1.109 trillion, or 24.0%, with Retail MMFs rising by $629 billion (39.3%) and Inst MMFs rising by $480 billion (15.9%). (Note: Register and make hotel reservations soon for our upcoming Money Fund University, which takes place Dec. 18-19, 2023 in Jersey City, NJ. We hope to see you in next month!)
A press release entitled, "CFTC Seeks Public Comment on a Proposal on Investment of Customer Funds" tells us, "The Commodity Futures Trading Commission ... issued, for public comment, a proposed rule on the Investment of Customer Funds by Futures Commission Merchants and Derivatives Clearing Organizations. The proposal would amend the Commission's regulations governing the safeguarding and investment by futures commission merchants (FCMs) and derivatives clearing organizations of funds held for the benefit of customers engaging in futures, foreign futures, and cleared swaps transactions. The proposed amendments would specifically revise the list of permitted investments in Regulation 1.25 and introduce certain related changes and specifications.... The comment period will be open for 75 days after publication on CFTC.gov, with a closing date of January 17, 2024. Comments must be in writing and may be submitted electronically through the CFTC Comments online process. All comments received will be posted on CFTC.gov."
Crane Data's latest Money Fund Intelligence International shows that assets in European or "offshore" money market mutual funds moved higher again over the past 30 days to a record $1.149 trillion, and yields also inched higher. Assets for USD, EUR and GBP MMFs all rose over the past month. Last month, European MMF assets broke above their previous record high of $1.101 trillion set in mid-December 2021, and they've now surpassed last month's record of $1.117 trillion. These U.S.-style money funds, domiciled in Ireland or Luxembourg and denominated in US Dollars, Pound Sterling and Euros, increased by $32.7 billion over the 30 days through 11/13. The totals are up $119.1 billion (11.6%) year-to-date. (Note that currency moves in the U.S. dollar cause Euro and Sterling totals to shift when they're translated back into totals in U.S. dollars. See our latest MFI International for more on the "offshore" money fund marketplace. These funds are only available to qualified, non-U.S. investors.)
The November issue of our Bond Fund Intelligence, which was sent to subscribers Tuesday morning, features the stories, "After Bad October, Bond Funds Bounce Back Big in November," which reviews the case for a bond market rebound and "Feeding Frenzy on iShares 20+ Year Treasury Bond ETF," which quotes from recent news coverage on flows into TLT. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns fell in October while yields rose again. We excerpt from the new issue below. (Contact us if you'd like to see our latest Bond Fund Intelligence and BFI XLS spreadsheet, or our Bond Fund Portfolio Holdings data.)
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