Link of The Day
Crane 100 MF Index Dips to 3.94%
Money fund yields (7-day, annualized, simple, net) declined by 1 bp to 3.94% on average during the week ended Friday, October 3 (as measured by our Crane 100 Money Fund Index), after falling 8 bps the week prior. Fund yields should continue to inch lower in the coming weeks as they finish digesting the Fed's Sept. 17 25 bps cut. They've declined by 112 bps since the Fed first cut in the Fed funds target rate by 50 bps on Sept. 18, 2024, and they've declined by 69 bps since the Fed cut rates by 1/4 point on 11/7/24. Yields were 3.94% on 9/30, 4.11% on 8/31, 4.12% on 7/31, 4.13% on 6/30, 4.10% on 5/31, 4.13% on 4/30/25, 4.14% on 3/31/25 and 4.28% on average on 12/31/24. MMFs averaged 4.75% on 9/30/24, 5.10% on 6/28/24, 5.14% on 3/31/24 and 5.20% on 12/31/23. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 676), shows a 7-day yield of 3.84%, down 1 bp in the week through Friday. Prime Inst money fund yields were unchanged at 4.05% in the latest week. Government Inst MFs were unchanged at 3.95%. Treasury Inst MFs were down 1 bps at 3.88%. Treasury Retail MFs currently yield 3.65%, Government Retail MFs yield 3.65% and Prime Retail MFs yield 3.84%, Tax-exempt MF 7-day yields were up 7 bps to 2.51%. Assets of money market funds rose by $18.4 billion last week to $7.749 trillion, according to Crane Data's Money Fund Intelligence Daily. MMF assets hit a record high of $7.763 trillion on October 2. Month-to-date in October (through 10/2), MMF assets have increased $41.0 billion, after increasing by $105.2 trillion in September, $132.0 billion in August, $63.7 billion in July, $6.7 billion in June, $100.9 billion in May, decreasing $24.4 billion in April, increasing by $2.8 billion in March, $94.2 billion in February, $52.8 billion in January, $110.9 billion in December, $200.5 billion in November, and $97.5 billion last October. Weighted average maturities were at 41 days for the Crane MFA and 42 days the Crane 100 Money Fund Index. According to Monday's Money Fund Intelligence Daily, with data as of Friday (10/3), 113 money funds (out of 787 total) yield under 3.0% with $140.9 billion in assets, or 1.8%; 463 funds yield between 3.00% and 3.99% ($3.416 trillion, or 44.1%), 211 funds yield between 4.0% and 4.99% ($4.191 trillion, or 54.1%) and following the recent rate cut there continue to be zero funds yielding 5.0% or more. Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was down 3 bps at 0.36%, after falling 1 bp two weeks prior. The latest Brokerage Sweep Intelligence, with data as of October 3, shows one change over the past week. Ameriprise lowered rates for all accounts of $1K to $249K to 0.10% and for accounts of $250K to $999K to 0.25%. 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.
Federated's Cunningham on MMF Lag
Federated Hermes Deborah Cunningham writes, "Slow and steady: When the Fed lowers rates, liquidity yields often decline more gradually than those in the direct market" in her latest monthly commentary. She says, "Another September rate cut and another reason to consider liquidity products. Common sense would say that when the Federal Reserve lowers its benchmark fed funds target range, as it did by a quarter percentage point two weeks ago, that interest rates and yields across the board would fall in concert. But finance doesn't always operate the way it seems it should (who isn't confused when first told that a bond's price falls when its yield rises). It is true that yields of securities in the direct market, such as government auctions, overnight trading and floating-rate securities, adjust quickly to changes in the fed funds level, now in a target range of 4-4.25%. But that's not the case for many financial products, such as mortgages and money market products. Mortgage rates key off the 10-year Treasury; money market portfolios use a 'laddered strategy.'" The brief continues, "In a falling-rate environment, 'laddered' simply means money market portfolios hold securities of different maturities bought with the higher rates available before the Fed cut. This in turn typically causes yields of these portfolios to decline slower than those found in the direct market. That can make them attractive to investors, and accounts may see inflows. It was the case last autumn and true so far this year. As of Monday, the total industry has experienced inflows of around $55 billion since the Fed action, according to iMoneyNet." Cunningham adds, "I am happy to report that ... money market fund assets [domiciled in Ireland] have passed $1 trillion, a record according to Crane Data. That's following the same pattern of growth amid falling rates. Despite the fact that the European Central Bank has taken its deposit rate to 2%, it would seem money funds are similarly becoming more attractive.... Supply and demand is another important factor in the calculation of money market yields. That's especially the case with commercial paper held by prime money funds. The amount of issuance continues to grow, largely resulting in higher yields and wider spreads above similar maturity Treasurys. And this market is becoming more diverse, with tech and manufacturing companies issuing short-term paper in addition to the bread-and-butter financial services sector. Diversification is a key element of money funds, so this is a notable development."
Funds Europe Writes on Tokenisation
Funds Europe interviews Franklin Templeton's Robert Crossley in, "Tokenisation Will Redraw the Financial Map." They comment, "As tokenisation gathers momentum across global capital markets, Robert Crossley, head of thematic research at Franklin Templeton, argues that the industry is only just beginning to grasp the transformative implications of blockchain-based finance.... 'We launched the first tokenised US '40 Act money market fund back in April 2021 -- not as a proof of concept, but as a production-grade product with real-world benefits.'" The piece states, "He sees tokenised money market funds as the vanguard. Franklin's tokenised 'Benji' fund -- initially launched in the U.S. and more recently in Luxembourg -- offers investors daily interest payments (with intraday payments soon possible), full on-chain shareholder registers, and greater flexibility around collateral use. 'These funds act as a bridge between traditional finance and decentralised digital finance,' says Crossley. 'Unlike stablecoins, which offer no interest and limited transparency, tokenised money market funds are hard, regulated assets. They're what's enabling the direct exchange of value across financial systems." It adds, "Usage of the Benji fund has been wide-ranging: from corporate treasurers seeking real-time liquidity control, to crypto exchanges using the fund as high-quality collateral, to retail investors drawn by the transparency of daily interest payments. Franklin Templeton currently has approximately $750 million in AUM across its tokenised money market offerings. Yet, Crossley is quick to note that the scale of AUM is a lagging indicator. 'Whether it's $50 or $500 billion, that tells you more about adoption than about innovation. The meaningful change is the shift in infrastructure, and that's happening beneath the surface."
OFR's Treasury Tri-party Repo Pricing
The U.S. Treasury's Office of Financial Research published a paper on "Treasury Tri-party Repo Pricing." It tells us, "The U.S. tri-party repurchase agreement (repo) market segment is a large over-the-counter venue critical for more than $2 trillion in daily funding and central bank open market operations. Using a confidential and comprehensive dataset, this paper examines the pricing of overnight tri-party repos, a key input to the U.S. Secured Overnight Financing Rate benchmark. Despite these transactions having negligible maturity, collateral, and counterparty risk, there is significant variation in the prices that market participants receive, which depend on (1) the number of counterparties they frequently trade with, (2) the degree of diversification across those counterparties, and (3) the share of trading activity those counterparties represent. Notably, during periods of market stress, these features can significantly alter the pricing impact experienced by borrowers." The paper says, "This market provides a unique venue in which a diverse set of institutions invest their cash and obtain large amounts of funding on a daily basis. Beyond its important funding role, this market plays a critical function in U.S. monetary policy as it is used by the Federal Reserve (Fed) to influence rates through open market operations. Overnight transactions collateralized with U.S Treasuries, or overnight tri-party repos, are also important as their rates serve as a key input to the Secured Overnight Financing Rate (SOFR). Despite its significance, pricing in this market remains imperfectly understood, largely due to the absence of publicly available disaggregated data. By leveraging a confidential, comprehensive transaction-level dataset, we aim to fill this gap by empirically studying how frictions in this market can alter tri-party repo pricing." The piece adds, "The bilateral nature of repos means that participants privately negotiate terms, each with partial knowledge about the terms available to others. As a result, prices can be influenced by participants' private information, preferences, and alternative trading opportunities. Also, because repos resemble collateralized loans, factors such as collateral, loan maturity, and counterparty risk can affect prices. To remove the impact of as many factors as possible, we deliberately focus on overnight Treasury tri-party repos where considerations about maturity, collateral, and counterparty risk are likely to be negligible."
Paper Takes Aim at Tax-Exempt MMFs
A new paper titled, "When Complexity Excuses Enforcement: The Regulatory Gap in Tax-Exempt Money Market Fund Disclosure of Municipal VRDO Deemed Reissuances," written by Michael Lissack of Tongji University, says, "This Article exposes the most egregious enforcement asymmetry in modern securities regulation: while state attorneys general and federal prosecutors pursue remarketing agents for systematic Variable Rate Demand Obligation (VRDO) manipulation through record settlements and ongoing litigation, money market fund managers whose shareholders directly profited from these violations have entirely escaped regulatory accountability. Despite collecting billions in management fees on artificially enhanced returns generated by systematic violations, fund managers have systematically concealed obvious deemed reissuance risks from investors while regulatory authorities pursue zero enforcement actions." The summary continues, "Justice Andrew Borrok's April 2025 decision in State of New York ex rel. Edelweiss Fund LLC v. JPMorgan Chase & Co. eliminates all remaining excuses for this enforcement failure. The court found substantial evidence that remarketing agents' systematic 'bucketing' practices operated outside disclosed parameters -- establishing the prerequisite condition that, when combined with interest rate changes of 25 basis points or more under Treas. Reg. § 1.1001-3, would trigger deemed reissuances affecting the tax-exempt status of fund distributions. This judicial validation, combined with current market volatility creating mathematical certainty of ongoing Treasury Regulation threshold breaches, makes continued regulatory inaction toward money market fund managers a dereliction of investor protection duties." It adds, "The Article establishes that regulatory authorities can no longer justify enforcement asymmetry that protects primary beneficiaries while pursuing only those who implemented violations. The evidence is overwhelming, the judicial validation of undisclosed practices is explicit, and current violations are mathematically demonstrable when these practices combine with documented rate movements. The time for regulatory complexity excuses has ended."
Crane 100 MF Index Falls to 3.95%
Money fund yields (7-day, annualized, simple, net) declined by 8 bps to 3.95% on average during the week ended Friday, September 26 (as measured by our Crane 100 Money Fund Index), after falling 6 bps the week prior. Fund yields should continue to inch lower in the coming weeks as they finish digesting the Fed's Sept. 17 25 bps cut. They've declined by 111 bps since the Fed first cut its Fed funds target rate by 50 bps on Sept. 18, 2024, and they've declined by 68 bps since the Fed last cut rates by 1/4 point on 11/7/24. Yields were 4.11% on 8/31, 4.12% on 7/31, 4.13% on 6/30, 4.10% on 5/31, 4.13% on 4/30/25, 4.14% on 3/31/25 and 4.28% on average on 12/31/24. MMFs averaged 4.75% on 9/30/24, 5.10% on 6/28/24, 5.14% on 3/31/24 and 5.20% on 12/31/23. The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 676), shows a 7-day yield of 3.84%, down 9 bps in the week through Friday. Prime Inst money fund yields were down 10 bps at 4.05% in the latest week. Government Inst MFs were down 10 bps at 3.94%. Treasury Inst MFs were down 6 bps at 3.89%. Treasury Retail MFs currently yield 3.66%, Government Retail MFs yield 3.66% and Prime Retail MFs yield 3.84%, Tax-exempt MF 7-day yields were up 11 bps to 2.44%. Assets of money market funds rose by $71.8 billion last week to $7.730 trillion, according to Crane Data's Money Fund Intelligence Daily. MMF assets hit a record high of $7.730 trillion on September 26, breaking above a previous high of $7.726 trillion set on September 25. For the month of September (MTD), MMF assets have increased $127.8 billion after increasing by $132.0 billion in August, $63.7 billion in July, $6.7 billion in June, $100.9 billion in May, decreasing $24.4 billion in April, increasing by $2.8 billion in March, $94.2 billion in February, $52.8 billion in January, $110.9 billion in December, $200.5 billion in November, and $97.5 billion in October. Weighted average maturities were at 41 days for the Crane MFA and 42 days the Crane 100 Money Fund Index. According to Monday's Money Fund Intelligence Daily, with data as of Friday (9/26), 116 money funds (out of 787 total) yield under 3.0% with $142.7 billion in assets, or 1.8%; 443 funds yield between 3.00% and 3.99% ($2.955 trillion, or 38.2%), 228 funds yield between 4.0% and 4.99% ($4.632 trillion, or 59.9%) and following the recent rate cut there continue to be zero funds yielding 5.0% or more. Our Brokerage Sweep Intelligence Index, an average of FDIC-insured cash options from major brokerages, was unchanged at 0.39%, after falling 1 bp the week prior. The latest Brokerage Sweep Intelligence, with data as of September 26, shows no changes over the past week. 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.
Ripple, Franklin Tokenized MMF Deal
Ripple posted a press release, "DBS and Franklin Templeton to Launch Trading and Lending Solutions Powered by Tokenised Money Market Funds and Ripple's RLUSD Stablecoin." It says, "DBS, Franklin Templeton and Ripple are partnering to provide accredited and institutional investors with innovative trading and lending solutions, powered by tokenised money market funds on the XRP ledger blockchain and stablecoins such as Ripple USD (RLUSD)." The release continues, "This partnership -- formalised with the signing of a memorandum of understanding -- brings together the unique strengths of one of Asia's largest financial institutions, a global investment manager and the leader in enterprise blockchain and cryptocurrency solutions. It marks a new milestone in the growing maturation of the digital asset ecosystem, which is already seeing greater interest from institutional investors allocating to the asset class -- some 87% of institutional investors expect to make investments into digital assets in 2025." The update adds, "To enable clients to manage their digital asset portfolios more nimbly in response to rapidly changing market conditions, DBS Digital Exchange (DDEx) will list sgBENJI -- the token of Franklin Templeton's tokenised money market fund, Franklin Onchain U.S. Dollar Short-Term Money Market Fund -- alongside RLUSD. With this setup, eligible DBS clients can trade RLUSD for sgBENJI tokens, enabling them to rebalance their portfolios into a relatively stable asset 24/7 and within minutes, while earning yield during periods of volatility. In the next phase of the partnership, DBS will explore helping clients unlock liquidity by using their sgBENJI tokens as collateral. Potential use cases include obtaining credit either from the bank via a repurchase transaction (repo), or from third-party platforms where DBS will act as an agent holding the collateral. This gives clients access to wider liquidity pools while providing peace of mind to clients and third-party lenders that the pledged collateral is held with a trusted bank."
MassMutual U.S. Govt MMF Liquidates
A Prospectus Supplement filing for MassMutual U.S. Government Money Market Fund announced the liquidation of the fund. It says, "Effective September 5, 2025 (the 'Termination Date'), the MassMutual U.S. Government Money Market Fund (the 'Fund') was dissolved pursuant to a Plan of Liquidation and Termination, approved by the Board of Trustees of the MassMutual Premier Funds. Shareholders of Class R5 shares of the Fund received proceeds in proportion to the number of Class R5 shares held by each of them on the Termination Date."
P&I Commentary on UK Money Markets
Pensions & Investments posted a "Commentary" on "The Liquidity Leapfrog -- the U.K.'s Late Entry Advantage in Money Markets." It says, "In technology, it is often not the first movers who succeed, but the fast followers who build upon their predecessors' experiences. Countries that arrived late to the mobile revolution -- lacking legacy infrastructure -- were able to leapfrog straight to digital banking, skipping over copper lines and checkbooks. A similar opportunity is now emerging in U.K. money markets. While the U.S. has built a vast and mature $7 trillion money market fund ecosystem, the U.K. has so far been a bystander. Retail and even many institutional investors remain wedded to traditional deposit models, unaware that inflation has quietly eaten into real returns for years. Yet, this late start presents a unique opportunity. With better digital infrastructure, clearer regulatory direction, and increasing investor awareness, the U.K. could now build a cleaner, more efficient money market model -- avoiding some of the structural inefficiencies the U.S. developed along the way."
Weekly Money Fund Portfolio Holdings
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 September 19) includes Holdings information from 74 money funds (up 12 from a week ago), or $4.310 trillion (up from $3.847 trillion) of the $7.658 trillion in total money fund assets (or 56.3%) tracked by Crane Data. (Note: 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 September 11 News, "Sept. Money Fund Portfolio Holdings: Repo Plummets, Treasuries Surge.”) Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $2.082 trillion (up from $1.910 trillion a week ago), or 48.3%; Repurchase Agreements (Repo) totaling $1.468 trillion (up from $1.297 trillion a week ago), or 34.1%, and Government Agency securities totaling $376.6 billion (up from $334.1 billion a week ago), or 8.7%. Commercial Paper (CP) totaled $178.5 billion (up from $142.2 billion a week ago), or 4.1%. Certificates of Deposit (CDs) totaled $91.1 billion (up from $76.9 billion a week ago), or 2.1%. The Other category accounted for $60.5 billion or 1.4%, while VRDNs accounted for $52.9 billion or 1.2%. The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $2.082 trillion (48.3% of total holdings), Fixed Income Clearing Corp with $521.6B (12.1%), the Federal Home Loan Bank with $230.3B (5.3%), JP Morgan with $124.7B (2.9%), BNP Paribas with $107.9B (2.5%), RBC with $105.1B (2.4%), Federal Farm Credit Bank with $93.4B (2.2%), Citi with $87.5B (2.0%), Wells Fargo with $77.5B (1.8%) and Bank of America with $59.3B (1.4%). The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($303.3B), Fidelity Inv MM: Govt Port ($283.3B), JPMorgan 100% US Treas MMkt ($257.4B), Goldman Sachs FS Govt ($238.5B), BlackRock Lq FedFund ($179.6B), Federated Hermes Govt ObI ($175.3B), BlackRock Lq Treas Tr ($166.0B), State Street Inst US Govt ($165.5B), Morgan Stanley Inst Liq Govt ($164.8B) and Fidelity Inv MM: MM Port ($162.9B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
DWS CAT Tax-Exempt Svc Liquidating
A Prospectus Supplement filing for the "Cash Account Trust – Tax-Exempt Portfolio, Service Shares," tells us, "Upon the recommendation of DWS Investment Management Americas, Inc. (the 'Advisor'), the investment advisor for DWS Tax-Exempt Portfolio (the 'Fund'), the Board of Trustees of Cash Account Trust has authorized, on behalf of the Fund, the termination and liquidation of Service Shares, a share class of the Fund (the 'Class'), which will be effective on or about November 25, 2025 (the 'Liquidation Date'). Accordingly, the Fund will redeem all outstanding Class shares on the Liquidation Date. The costs of the liquidation, including the notification to shareholders, will be borne by the Fund but reimbursed by the Advisor, after taking into account applicable voluntary or contractual expense caps then in effect by the Advisor to waive or reimburse certain operating expenses of the Fund. Shareholders who elect to redeem their Class shares prior to the Liquidation Date will receive the net asset value per share (normally, $1.00) on such redemption date for all Class shares they redeem. Shareholders whose Class shares are redeemed automatically on the Liquidation Date will receive the net asset value per share (normally, $1.00) for all Class shares they own on the Liquidation Date." The filing adds, The Class will be closed to new investors effective immediately. Retirement plans that currently offer the Class as an investment option may continue to offer the Class to their participants until the Liquidation Date and the Class will continue to accept subsequent investments and dividend reinvestments for existing accounts until the Liquidation Date."
Crane in WSJ: Wall of Cash Staying Put
The Wall Street Journal writes, "U.S. Investors Are Flush With Cash, and Happy to Keep It There." The piece says, "U.S. investors are sitting on a pile of cash. Even with rates now coming down, many are in no rush to move it. Assets in money-market funds reached a record $7.7 trillion last week, with more than $60 billion flowing into those funds during the first four days of the month, according to Crane Data, an industry researcher. The latest rush into money funds began in 2022, when the Federal Reserve started raising rates. The yields on these funds, which typically hold short-term government debt, also rose, giving investors higher returns on their cash than they have had in years. Many have kept a larger slice of their portfolios in these cash-like investments ever since -- as the stock market raced to record highs." They explain, "That is unlikely to change soon, even with the Fed now cutting rates. Money funds are still yielding a lot more than what they had in the 2010s and early 2020s, when the financial crisis and then the Covid pandemic pushed rates to ultralow levels. With stocks by some measures now more expensive than ever, some investors are willing to wait for discounts. And it will take more than one (or two or three) rate cuts to change their minds. 'It is indeed a 'wall of cash,' because it ain't going anywhere,' said Peter Crane, president of Crane Data." The article adds, "Money-market funds offer a seven-day annualized net yield of 4.1% as of the end of August, according to Crane's index of 100 such funds. The national average annual yield for a bank savings account is a paltry 0.6%, according to a survey by Bankrate.... The cash stash in money-market funds is likely to keep growing through the end of the year, said Crane, who said he wouldn't be surprised to see total assets in the funds surpass $8 trillion by 2026. November and December are usually strong months for money funds, he said. Companies and governments might also temporarily park cash in money-market funds, he said, since their yields don't adjust to Fed moves as quickly as Treasurys do."
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