News Archives: October, 2025
The Investment Company Institute's released its latest weekly "Money Market Fund Assets" report and its latest monthly "Trends in Mutual Fund Investing - September 2025" and "Month-End Portfolio Holdings of Taxable Money Funds" on Thursday. The former shows money fund assets increasing by $20.6 billion to a new record high of $7.418 trillion. Assets have risen in 5 of the last 6 weeks, and 13 of the past 15 weeks. MMFs rose $30.4 billion the prior week, after falling $17.8 billion two weeks prior. MMF assets are up by $912 billion, or 14.0%, over the past 52 weeks (through 10/29/25), with Institutional MMFs up $535 billion, or 13.8% and Retail MMFs up $377 billion, or 14.4%. Year-to-date, MMF assets are up by $568 billion, or 8.3%, with Institutional MMFs up $299 billion, or 7.3% and Retail MMFs up $269 billion, or 9.8%.
ICI's weekly release says, "Total money market fund assets increased by $20.60 billion to $7.42 trillion for the week ended Wednesday, October 29, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $23.50 billion and prime funds decreased by $2.54 billion. Tax-exempt money market funds decreased by $356 million." ICI's stats show Institutional MMFs increasing $13.3 billion and Retail MMFs increasing $7.3 billion in the latest week. Total Government MMF assets, including Treasury funds, were $6.067 trillion (81.8% of all money funds), while Total Prime MMFs were $1.212 trillion (16.3%). Tax Exempt MMFs totaled $138.9 billion (1.9%).
It explains, "Assets of retail money market funds increased by $12.16 billion to $3.00 trillion. Among retail funds, government money market fund assets increased by $9.25 billion to $1.89 trillion, prime money market fund assets increased by $4.44 billion to $983.74 billion, and tax-exempt fund assets decreased by $1.52 billion to $126.86 billion." Retail assets account for 40.5% of the total, and Government Retail assets make up 63.0% of all Retail MMFs.
They add, "Assets of institutional money market funds increased by $13.34 billion to $4.41 trillion. Among institutional funds, government money market fund assets increased by $15.96 billion to $4.17 trillion, prime money market fund assets decreased by $2.09 billion to $229.14 billion, and tax-exempt fund assets decreased by $530 million to $11.91 billion." Institutional assets accounted for 59.5% of all MMF assets, with Government Institutional assets making up 94.5% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets have increased by $105.8 billion to $7.813 trillion month-to-date in October (as of 10/29). They hit a record high of $7.821 trillion on October 28, but dipped on Wednesday. Assets increased by $105.2 billion in September, $132.0 billion in August, $63.7 billion in July, $6.7 billion in June and $100.9 billion in May. They fell by $24.4 billion in April, but rose $2.8 trillion in March, $94.2 billion in February and $52.8 billion in January. They jumped $110.9 billion in December, $200.5 billion in November, and $97.5 billion last October. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're almost $400 billion lower than Crane's asset series.
ICI's monthly Trends shows money fund totals increasing $104.5 billion, or 1.4%, in September to $7.321 trillion. MMFs have increased by $896.4 billion, or 14.0%, over the past 12 months (through 9/30/25). Money funds' September asset increase follows an increase of $123.4 billion in August, $69.0 billion in July, $29.3 billion in June and $84.7 billion in May. Assets decreased $63.8 billion in April and $10.9 billion in March, but increased of $99.0 billion in February, $31.9 billion in January and $139.3 billion in December. They rose $171.5 billion in November and $117.4 billion in October. Bond fund assets increased $84.2 billion to $5.412 trillion, and bond ETF assets increased to $2.11 trillion in September 2025.
The monthly release states, "The combined assets of the nation's mutual funds increased by $590.25 billion, or 2.0 percent, to $30.79 trillion in September, according to the Investment Company Institute's official survey of the mutual fund industry. In the survey, mutual fund companies report actual assets, sales, and redemptions to ICI.... Bond funds had an inflow of $26.97 billion in September, compared with an inflow of $16.40 billion in August.... Money market funds had an inflow of $87.45 billion in September, compared with an inflow of $108.02 billion in August. In September funds offered primarily to institutions had an inflow of $74.58 billion and funds offered primarily to individuals had an inflow of $12.87 billion."
The Institute's latest statistics show that Taxable MMFs and Tax Exempt MMFs were both higher from last month. Taxable MMFs increased by $102.8 billion in September to $7.183 trillion. Tax-Exempt MMFs increased $1.7 billion to $138.0 billion. Taxable MMF assets increased year-over-year by $888.1 billion (14.1%), and Tax-Exempt funds rose by $8.3 billion over the past year (6.4%). Bond fund assets increased by $84.2 billion (after increasing by $73.1 billion in August) to $5.412 trillion; they've increased by $299.8 billion (5.9%) over the past year.
Money funds represent 23.8% of all mutual fund assets (down 0.1% from the previous month), while bond funds account for 17.6%, according to ICI. The total number of money market funds was 261, down 1 from the prior month and down from 263 a year ago. Taxable money funds numbered 220 funds, and tax-exempt money funds numbered 41 funds.
ICI's "Month-End Portfolio Holdings" confirms a jump in Treasuries and an increase in Repo last month. Treasury holdings, became the largest composition segment two months ago after overtaking Repo, In September they increased $86.0 billion, or 2.9%, to $3.063 trillion, or 42.6% of holdings. Treasury securities have increased by $553.5 billion, or 22.1%, over the past 12 months. (See our October 10 News, "Oct. Money Fund Portfolio Holdings: T-Bills Jump Again, Repo Rebounds.")
Repurchase Agreements became the second largest composition segment two months prior after falling in August, they rose $19.9 billion, or 0.8%, to $2.595 trillion, or 36.1% of holdings. Repo holdings have increased $94.6 billion, or 3.8%, over the past year. U.S. Government Agency securities were the third largest segment; they increased $28.6 billion, or 3.2%, to $917.2 billion, or 12.8% of holdings. Agency holdings have increased by $172.8 billion, or 23.2%, over the past 12 months.
Commercial Paper was in fourth place; they decreased by $17.9 billion, or -5.8%, to $292.4 billion (4.1% of assets). CP held by money funds rose by $19.6 billion, or 7.2%, over 12 months. Certificates of Deposit (CDs) were in fifth place, down $53.6 billion, or -17.4%, to $254.0 billion (3.5% of assets). CDs decreased $57.3 billion, or -18.4%, over one year. Other holdings increased to $22.8 billion (0.3% of assets), while Notes (including Corporate and Bank) decreased to $37.2 billion (0.5% of assets).
The Number of Accounts Outstanding in ICI's series for taxable money funds increased to 82.278 million, while the Number of Funds was down 1 at 220. Over the past 12 months, the number of accounts rose by 9.626 million and the number of funds increased by 3. The Average Maturity of Portfolios was 41 days, unchanged from August. Over the past 12 months, WAMs of Taxable money are up 11 days.
Assets of money market funds rose by $27.3 billion over the past week to a record high $7.821 trillion (as of 10/28), according to Crane Data's Money Fund Intelligence Daily. MMF assets broke above the $7.8 trillion level for the first time ever on October 27. Month-to-date in October (through 10/28), MMF assets have increased $113.1 billion, after increasing by $105.2 trillion in September, $132.0 billion in August and $63.7 billion in July. They rose $6.7 billion in June and $100.9 billion in May, but decreased $24.4 billion in April. Assets increased 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.
Also, as expected, the Federal Reserve's FOMC cut interest rates by a quarter percent to a range of 3.75-4.0%, which means that money market fund yields will decline by a similar amount over the coming month. Our Crane 100 Money Fund Index, an average of the 100 largest money funds, should fall from its current 3.93% starting next week. (Money funds have a WAM, or weighted average maturity of 41 days currently, so they should take this long to reflect the full Fed move.) A post titled, "Federal Reserve issues FOMC statement," explains, "Available indicators suggest that economic activity has been expanding at a moderate pace. Job gains have slowed this year, and the unemployment rate has edged up but remained low through August; more recent indicators are consistent with these developments. Inflation has moved up since earlier in the year and remains somewhat elevated. The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. Uncertainty about the economic outlook remains elevated. The Committee is attentive to the risks to both sides of its dual mandate and judges that downside risks to employment rose in recent months."
It states, "In support of its goals and in light of the shift in the balance of risks, the Committee decided to lower the target range for the federal funds rate by 1/4 percentage point to 3-3/4 to 4 percent. In considering additional adjustments to the target range for the federal funds rate, the Committee will carefully assess incoming data, the evolving outlook, and the balance of risks. The Committee decided to conclude the reduction of its aggregate securities holdings on December 1. The Committee is strongly committed to supporting maximum employment and returning inflation to its 2 percent objective."
The FOMC writes, "In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee's goals. The Committee's assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments."
They add, "Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Susan M. Collins; Lisa D. Cook; Austan D. Goolsbee; Philip N. Jefferson; Alberto G. Musalem; and Christopher J. Waller. Voting against this action was Stephen I. Miran, who preferred to lower the target range for the federal funds rate by 1/2 percentage point at this meeting, and Jeffrey R. Schmid, who preferred no change to the target range for the federal funds rate at this meeting."
In other news, Raymond James reported earnings recently, and mentioned sweep accounts several times on their latest earnings call. CFO Jonathan Oorlog states, "Clients' domestic cash sweep and enhanced savings program balances ended the quarter at $56.4 billion, up 2% over the preceding quarter and representing 3.7% of domestic PCG client assets. Balances increased $2.2 billion or 4% in the month of September, growing nicely after fee billings had resulted in anticipated decreases earlier in the quarter. Based on October activity to date, domestic cash sweep and enhanced savings program balances have declined as anticipated given October's record quarterly fee billings of approximately $1.8 billion."
He continues, "Combined net interest income and RJBDP fees from third-party banks was $653 million, down slightly from the prior quarter. Net interest margin in the Bank segment decreased 3 basis points to 2.71% for the quarter. The average yield on RJBDP balances with third-party banks decreased 5 basis points to 2.91%, in part due to the impact of the September Fed interest rate cut."
Oorlog says, "Based on current interest rates, including the full quarter impact of the September rate cut, in quarter end balances net of the $1.8 billion fiscal first quarter fee billings, we would expect the aggregate of NII and RJBDP third-party fees in the first quarter to be approximately flat with the fourth quarter level. This is largely the result of the positive impact of a higher interest earning asset balance as of the September starting point offsetting the full quarter impact of the September Fed rate action. Keep in mind, there are many variables which could influence actual results, including any interest rate actions during the upcoming quarter and factors affecting our balance sheet, including changes in our loan and deposit balances."
Finally, during the Q&A, they were asked about "bring[ing] some of the third-party sweep deposits back on to balance sheet." CEO Paul Shoukry responds, "We have plenty of capacity with third-party banks, so we'll be able to bring that on-balance sheet to fund growth. We also can continue, to a certain extent, running down some of the securities portfolio. And then we have a very diversified funding apparatus where we can gather deposits both that to -- the Private Client Group, Raymond James Bank and TriState Capital Bank have very substantial treasury management capabilities and depository capabilities to diversify our funding sources. So we have ample funding capabilities and are staying ready to support continued growth going forward."
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 October 24) includes Holdings information from 74 money funds (up 12 from a week ago), or $4.836 trillion (up from $3.924 trillion) of the $7.764 trillion in total money fund assets (or 62.3%) 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 October 10 News, "Oct. Money Fund Portfolio Holdings: T-Bills Jump Again, Repo Rebounds.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $2.139 trillion (up from $1.943 trillion a week ago), or 48.8%; Repurchase Agreements (Repo) totaling $1.492 trillion (up from $1.346 trillion a week ago), or 34.0%, and Government Agency securities totaling $390.4 billion (up from $344.8 billion a week ago), or 8.9%. Commercial Paper (CP) totaled $168.9 billion (up from $132.4 billion a week ago), or 3.9%. Certificates of Deposit (CDs) totaled $89.6 billion (up from $74.1 billion a week ago), or 2.0%. The Other category accounted for $52.3 billion or 1.2%, while VRDNs accounted for $53.6 billion or 1.2%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $2.139 trillion, Fixed Income Clearing Corp with $498.2B, the Federal Home Loan Bank with $236.2B, JP Morgan with $122.0B, BNP Paribas with $109.2B, Citi with $106.8B, RBC with $104.8B, Federal Farm Credit Bank with $93.3B, Wells Fargo with $85.3B and Barclays PLC with $63.7B.
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($306.1B), JPMorgan 100% US Treas MMkt ($268.7B), Fidelity Inv MM: Govt Port ($268.2B), Goldman Sachs FS Govt ($262.9B), State Street Inst US Govt ($185.0B), Federated Hermes Govt ObI ($182.8B), BlackRock Lq FedFund ($181.7B), Fidelity Inv MM: MM Port ($168.8B), BlackRock Lq Treas Tr ($161.0B) and Morgan Stanley Inst Liq Govt ($160.2B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
In other news, J.P. Morgan writes in its latest "Short-Term Market Outlook And Strategy," "Year-to-date, AUMs have already risen by about $600bn to $7.65tn -- a pace that is outstripping last year over the comparable period. With typical seasonal inflows, along with organic interest growth, it would not be surprising to see balances edge above $7.7tn by year-end. At the same time, despite MMFs aggressively extending duration in the month leading into September, WAMs have remained mostly stable over the past few weeks and are currently around 41-days, close to peak 2021 levels."
They tell us, "Meanwhile, net T-bill supply from now until year-end is expected to be a mere $16bn: $51bn next week, $82bn of T-bill issuance forecasted in November, but followed by $117bn of paydowns in December. This should further steer any incremental inflows into MMFs slightly more toward repo markets, and on the margin wider SOFR/FF basis as well."
The piece says, "To that end, if a technical adjustment to the SRF rate and TOMOs are confirmed next week, alongside MMF behavior and muted net T-bill supply over the coming months, we think it makes sense to be long SOFR/FF, though we would wait for clarity from the Fed next week before recommending entry."
A section titled, "September holdings update: MMFs absorb Treasury and repo supply," says, "September was yet another leg higher for MMF allocations toward Treasury securities, though primarily in coupons. Based on recent holdings data, government MMF allocations to Treasury coupons maturing in the money markets jumped by $44bn month-over-month, a 16% increase, reaching $311bn by month-end, the highest level in at least seven years."
It continues, "Government funds did increase T-bill holdings as well, but more modestly than in recent months, reflecting a comparatively lighter supply backdrop in September. Even so, bill allocations still rose by $27bn to $2.367tn in total. Treasury FRNs also saw a modest increase of $22bn to $461bn. In line with the trend of extending duration, government MMFs increased their holdings of Agency discount notes by $45bn month-over-month, while reducing Agency FRNs by nearly $30bn."
JPM writes, "Meanwhile, prime funds were notably more active in allocating their portfolios towards repo. In September, Prime MMFs allocated a substantial $116bn to repo (ex-Fed), bringing total allocations to a record high of $615bn, and accounting for 47% of their total portfolios. This increase was largely offset by a reduction in short-term credit exposure, particularly to banks in the Eurozone and other Yankee banks, which declined by $95bn, possibly a reflection of quarter-end, and higher repo levels. Additionally, Prime MMFs decreased ON RRP balances by $20bn and reduced Treasury holdings by $15bn."
They add, "Collectively, across both Government and Prime MMFs, total FICC-sponsored repo saw a significant increase of $159bn, bringing total allocations to about $1.1tn in September. As of quarter-end, nearly 40% of all MMF repo exposure was with sponsored repo, the highest share on record, as dealers look for balance sheet efficiencies. Correspondingly, dealer repo exposure fell by $100bn, led by reductions in US (–$47bn), French (–$29bn), and U.K. (–$21bn) counterparties. MMFs still hold an estimated 36% of their portfolios in repo -- slightly lower than the peak at the end of July, but still up nearly 3% year-over-year, while T-bill allocations continue to hover near 33% of total portfolios."
As we wrote yesterday, the Federal Reserve Bank of Dallas published a paper titled, "Network structure of money markets and firms affects policy transmission," which also includes a nice primer on the repo, or repurchase agreement market. They write, "The repo market is the largest market for overnight liquidity. It is a critical source of financing for dealers, hedge funds and other non-depositories. Asset managers (including money market funds) and large depositories do most of the net lending in this market. Repo transactions take place across multiple segments, typically identified by whether they are centrally cleared and whether they occur on the books of custodial banks. In triparty repo, which occurs on the books of a custodial bank, most of the borrowing activity can be attributed to dealers and foreign banks." (Note: Thanks to those who visited with us during `AFP 25 in Boston!)
The Dallas Fed piece explains, "The Fixed Income Clearing Corp. DVP Service is a centrally cleared portion of the market that does not remain on the books of a custodial bank. Transactions in this portion of the market largely occur between dealers, though the composition of this segment has been changing as dealers optimize their portfolios in response to regulation and in anticipation of the adoption of a central clearing mandate for Treasuries."
It tells us, "The repo market famously reacted more strongly than others to the scarcity of reserves that emerged in September 2019. This may seem puzzling, as firms unable to hold reserve balances do much of the lending and borrowing in this market. The outsized repo market reaction is often attributed to the fact that large banks lent less liquidity into this market than usual."
The paper says, "This explanation is true but incomplete for two reasons. First, since delivery-versus-payment repos are settled in reserves, and because repo markets are core to the sourcing of funding for the settlement of Treasury auctions (which also occur in reserves), some repo market transactions generate large flows of reserves. Second, many net borrowers in repo cannot hold reserves themselves, so any reserves shortfall limiting intermediation binds first on them and is reflected in repo market pricing. Recent work has suggested that the supply of money held by non-banks may play an important role in determining what level of reserves is ample."
It continues, "Though repo is important, like other markets, it reflects idiosyncrasies associated with the purposes for which it is used. For example, it displays monthly seasonality associated with government-sponsored enterprises lending in repo, as their cash holdings increase prior to mortgage-backed securities payment dates. Similarly, around regulatory reporting dates, some banks, especially foreign banks, withdraw from intermediation in repo."
The piece states, "Individual money markets involve different types of participants, and the borrowing and lending sides in most of these markets tend to involve different types of institutions. Apart from brokered deposits and DVP repo, very little trading of liquidity occurs between financial institutions of the same type. Further, the shortest links between various markets can often run through a single type of entity and at times even a small number of firms. This can at times mean that, due to idiosyncrasies of specific entities and markets, rates in one market may not represent conditions in others."
It adds, "Pass-through efficiency is highest when money market rates broadly remain near the rate of interest on reserves, which appears broadly consistent with how the outside option provided by policy rates functions in the model in the original paper. Dispersion tends to be lowest when the level of reserves is consistent with the average level of money market rates being close to the rate of interest the Fed pays on reserves."
The Dallas Fed says, "The basic intuition about this result is straightforward and arises from two basic facts. First, when rates in money markets fall below the interest rate on reserves (IOR), banks have an incentive to borrow in those markets and earn the spread; similarly, when rates in money markets rise above IOR, banks have an incentive to economize on their reserve holdings and lend into those markets. Second, banks have regulatory and other limitations on the degree to which this intermediation activity is economical for them. It follows that intermediation capacity is less binding when money market rates are closer to IOR, maximizing the pass-through of policy rates and, thus, minimizing dispersion."
They comment, "The structure of the network of entities and markets varies over time and is a critical determinant of rates across markets. Some of the markets bank treasurers typically rely on to manage liquidity also generate significant client flows that impact bank reserves. The pass-through efficiency of policy rates as measured by dispersion is highest when reserves are at a level consistent with money market rates typically remaining close to IOR. This arises from both bank incentives and limits on intermediation capacity."
Finally, the piece says, "One example of the impact of intermediation capacity on rate dispersion follows from the effects of foreign banks withdrawing from repo intermediation around quarter-ends. It can dramatically affect pricing, as intermediation demands on domestic banks increase in response to the temporary shift in the network structure away from its natural optimum. The intuition that arises from understanding the relationship between the network structure of money markets, intermediation capacity and rate dispersion has useful applications when monitoring reserve scarcity and understanding how it evolves in response to changes in regulation, market structure and other factors."
Earlier this month, the Federal Reserve Bank of Dallas published a paper titled, "Network structure of money markets and firms affects policy transmission," which serves as an excellent primer and overview of a number of issues in the money markets. It explains, "Banks rely on an intricate network of money markets for liquidity management, including brokered deposits, commercial paper, Federal Home Loan Bank advances, federal funds, Eurodollars and selected deposits and repurchase agreements. Different types of financial institutions participate in individual money markets, and the relationships between market rates are influenced by cross-product elasticities and arbitrage. The pass-through efficiency of policy rates, as measured by dispersion in money market rates, is highest when money market rates are close to the rate of interest on reserves. Understanding the underlying network structure of money markets provides valuable insights for monitoring reserve conditions and their evolution in response to regulatory and market changes." (Note: For those looking to learn about the money markets, Crane Data will be hosting its "basic training" Money Fund University, Dec. 18-19 in Pittsburgh. We're also exhibiting at the AFP 2025 annual treasury conference in Boston (10/26-28). We hope to see you there!)
The paper states, "Most advanced economy central banks before the Global Financial Crisis (2007–08) used scarce reserves frameworks under which policy rates were highly sensitive to reserve supply. A central bank could achieve a specific target rate by adjusting the reserve supply. In the ample reserves framework now used in the United States, interest rate sensitivity to reserve supply is moderate, limiting the practicality of rate control via reserve supply. Instead, target rates are primarily controlled through administered rates, which offer outside lending and borrowing options to certain market participants."
It continues, "Banks provide liquidity and maturity transformation, an essential function of the financial system. Central to this function is the management of liquidity balances, most importantly reserves. They are claims on the central bank that allow banks to settle interbank obligations. Money markets, which allow both banks and their nonbank clients to rebalance their liquidity, are essential to liquidity management. Money markets and the types of firms that participate in them are heterogeneous and form a complex network. Changes in policy instruments -- such as the supply of reserves or administered rates that touch on one part of the network -- ripple outward through the rest of the network."
The Dallas Fed writes, "While reserves can be traded directly (as in the federal funds market), most liquidity management transactions that give rise to reserve reallocation between banks occur in other money markets. Liquidity management can be highly complex, depending on the structure of a bank's liabilities, the transaction flow of its deposit customers and the liquidity of its assets."
They comment, "Bank treasurers rely on a variety of money markets for short-term liquidity management, including brokered deposits, commercial paper, Federal Home Loan Bank advances, federal funds, Eurodollars and selected deposits, and repurchase agreements (repo). Banks may also choose to rely on liquidity provided by the official sector, such as primary credit at the Fed discount window, which can be priced competitively with certain market segments and is intended to provide healthy banks with adequate liquidity in support of monetary policy transmission. Additionally, banks manage their liquid assets to adjust their liquidity positions, implicitly relying on market provision of liquidity, though this is outside the scope of this discussion."
The piece tells us, "It is instructive to view the various money markets from the perspective of a bank treasurer. Domestic banks generally rely on long-lived, stable deposits from households and nonfinancial businesses. But it is often not optimal to hold a liquidity buffer against all possible demands, and customer deposits are impractical and expensive to source on short notice. A treasurer's choice of liquidity source is determined by price, tenor (or term), settlement timing, market access and operational capacity. Differences in market access and operational capacity between large and small banks drive significant differences in the sources banks tap. Among foreign banks, restrictions on their ability to hold retail deposits in the U.S. (and elsewhere) steer them toward a different mix of liquidity sources than their domestic counterparts."
It says, "As a result, different types of financial institutions are active in different money markets. Entities include U.S. and foreign depositories of various sizes, dealers, money market funds, corporate treasurers, Federal Home Loan Banks and other nonbank financial institutions. The relationship between rates in different markets is thus determined by cross-product elasticities, a result of firms substituting between the various markets in which they borrow or lend, and arbitrage (firms simultaneously borrowing in one market and lending in another). One can think of the activity of different types of entities in different markets as a bipartite, directional graph, with this network represented as a matrix."
The paper also states, "The brokered deposit market allows banks, with the permission of their customers, to lend such deposits to other insured depository institutions via third-party brokers. This market is a small subset of the overall deposit liabilities of domestic banks. However, it is of outsized importance for banks' marginal liquidity needs. Banks of all sizes, especially community banks, rely on brokered deposits for this purpose. While this market is less well-documented than other money markets because it is relatively opaque, the outstanding volumes are typically around $1 trillion (excluding reciprocal deposits), making it one of the largest sources of wholesale funding for domestic banks."
It says, "CP is one of the oldest money markets and plays an important role financing some large financial institutions, though the market became smaller following the Global Financial Crisis and the ensuing money market fund reforms. Financial institution CP outstanding totals about $670 billion. The CP market is only a practical source of financing for relatively large issuers, who frequently issue directly to the market. Foreign banks frequently play a large role in issuance due to their dollar funding needs and lack of access to retail deposits. Lenders in this market are often prime money market funds, corporate treasurers and nonbank financial institutions. CP maturities are as short as one day but more frequently are around one month."
The Dallas Fed adds, "Like brokered deposits, Federal Home Loan Bank advances are a significant source of marginal liquidity for primarily small institutions, though banks of all sizes use these advances to optimize their liability structures. Advances owed by commercial banks vary significantly over time. They were around $500 billion as of first quarter 2025. While most advances are for a year or less, longer-tenor borrowing is available."
They write, "The federal funds market, often referred to as fed funds, is a primarily overnight market for liquidity between institutions that can hold reserve balances, including banks and government-sponsored enterprises. While it is a historically important money market -- it is the market that informs the effective federal funds rate, the Federal Open Markets Committee's policy target -- volumes in this market declined following the Global Financial Crisis. Activity now mostly reflects Federal Home Loan Bank lending to foreign banks. Federal Home Loan Banks need to hold liquidity balances intraday to meet client demand for advances. Thus, they value the early morning return of cash that occurs when lending overnight in fed funds. Because foreign banks are unable to hold retail deposits, this wholesale channel is especially valuable to them as a source of liquidity."
Finally, they tell us, "Eurodollars refer generally to U.S. dollar deposits held at banks outside the United States. This broader market has played a central role in the history of global finance since World War II. A portion of this market is captured in regulatory reports when banks borrow funds via a non-U.S. branch that are then transferred back onshore within the borrowing institution. 'Selected deposits' refer to uncollateralized interest-bearing domestic deposit liabilities with short and fixed terms. These are very similar to Eurodollars but are booked in domestic bank offices. Both Eurodollars and selected deposits are used similarly to fed funds; the main borrowers in these markets are foreign banks. However, unlike fed funds, the primary lenders in these markets are nonbank financial institutions." (This excerpts from just the first half of the paper; watch for the second half in coming days.)
Northern Trust (NTRS) released its Q3'25 earnings and hosted its latest earnings conference call earlier this week. CEO Mike O'Grady says, "The third quarter was marked by product innovation, including the launch of 11 new ETF strategies, eight of which are industry-first fixed-income distributing ladder ETFs.... Liquidity continues to be a standout area, with NTAM reporting its 11th consecutive quarter of positive flows. We expanded our Global Money Market Fund platform in the quarter with the launch of a U.S. Dollar Treasury liquidity strategy for European clients, building on the success of our onshore U.S. Treasury instrument strategy, which has already amassed more than $6 billion since its launch in June of 2024. Beyond liquidity, we saw positive flows in ETFs and custom SMAs, both key areas of focus, and fixed income, including two large high-yield mandates."
CFO Dave Fox comments, "The quarterly contribution from transactional and other one-time items normalized in the third quarter following elevated second quarter levels. Our net interest margin increased sequentially to 1.7%, reflecting the favorable deposit pricing actions taken, partially offset by unfavorable change in asset mix. Deposits performed largely as we expected. Average deposits were $116.7 billion, down 5% compared to second quarter levels, reflecting typical seasonal patterns coupled with normalization from elevated second quarter levels."
He continues, "Within the deposit base, interest-bearing deposits declined by 5%, and non-interest-bearing deposits decreased by 3%, but remained at 14% of the overall mix. Turning to our expenses.... Expenses increased 4.7% year over year in the third quarter. There were no notable expenses in the current or prior periods. Excluding unfavorable currency movements, expenses were up 4.4%."
Asked about stablecoins during the Q&A, O'Grady replies, "They want to be able to utilize whether it's stablecoins or a tokenized asset with their other assets. We're just making sure that our platform can do both of them. Now specifically to stablecoin, I would say stablecoin will find the areas that have the greatest friction. A lot of that, as you know, right now is probably cross-border or outside the U.S. I'll say we'll have the ability to utilize stablecoin, but we’re not planning to issue a stablecoin on that front."
He tells us, "Where we're more focused is on tokenization, because we believe that will impact multiple asset classes. A good place to start would just be around money market funds. Thinking about a tokenized money market fund, that's an area where I'd say we would look to be an issuer of a tokenized money market fund. That gives you some idea of the direction that we see."
Glenn Schorr from Evercore asks a, "Small but interesting [question] regarding the deposit rate paid on savings, money market, and other deposits. After going down for four quarters straight because rates have been coming down, it was actually up 6 basis points, and we had a cut in the quarter.... That's interesting. I'm more thinking about the go-forward. What caused that savings and money market rate to go up in a quarter when there's a rate cut? I know you gave us your thoughts on next year, so I appreciate that. I'm just curious what's going on these deposits."
Fox responds, "Deposits are also multi-currency, they're not just U.S. dollar, right? There may be some differences there that you might want to take a look at. We could certainly get more granular with you. On the top of it, I can't say in particular. I'd have to look at each currency and each particular investment that we made to kind of give you that read."
O’Grady replies, "We talk all the time about deposits and money market funds, and being able to be on that side of it. The other side is at times they need overnight liquidity the other direction. Not only securities lending, but also, FICC repo has been an area where we've added capabilities to be able to serve those clients and create a business that's both diversified from the other activities we have and also an attractive financial profile."
Charles Schwab also released Q3'25 earnings and hosted its 2025 Fall Business Update late last week. CFO Mike Verdeschi tells us, "Client cash levels continue to reflect normal behavior, inclusive of organic growth, seasonality and strong client engagement as equity markets reached record levels. We made further progress in reducing supplemental borrowings, which ended the quarter at $14.8 billion or just within the upper bound of our business as usual range.... Bank deposit account fees moved higher year-over-year due to an improved net yield as lower-yielding fixed-rate obligations continue to mature and converted into the floating rate bucket. September marked an inflection point for the BDA as we transition into the new $60 billion to $90 billion operating range for the remainder of the agreement and we gained the flexibility to move balances between the BDA and our balance sheet. During the third quarter, we transferred $3 billion worth of balances to Schwab to accelerate the paydown of bank supplemental borrowings."
He says, "Transactional sweep cash trends continue to reflect normal client behavior. Following modest outflows during July and August related to typical seasonality and client net buying activity, we saw $19 billion of cash inflows in September to bring the quarter end balance to $425.6 billion, which represents a quarter-over-quarter increase of $13.5 billion or approximately 3%. This sequential building cash, along with the use of investment portfolio proceeds and balances transferred from the BDA allow us to further reduce high-cost funding at the banks. We'd expect normal cash behavior to continue in 4Q including typical seasonality, such as adviser payments in October and the December cash build."
Verdeschi adds, "During the summer business update in July, we provided an updated financial scenario informed by several inputs, including a mid-July forward interest rate curve calling for 225 basis point cuts to the Fed funds target rate.... Moving forward to today, the interest rate curve now calls for a total of 325 basis point cuts during 2025 versus a previous expectation for only 2 cuts. Markets continue to move higher during the third quarter and client trading remains robust. However, the last couple of weeks remind us the environment can shift quickly. So in terms of the remainder of the year, we are likely to see various puts and takes as both rates and the broader markets evolve with the macroeconomic backdrop."
During the Q&A session, a question was asked on the topic of tokenization. CEO Richard Wurster answers, "First thing I'd say is for 50 years, it's been our mission to help investors get invested and to help them achieve their financial goals and dreams. So if we find an investor wants to hold securities on the blockchain, and that brings more investors into investing, then we're going to find a way to offer clients the opportunity to hold their securities on the blockchain and hold them as tokens."
He continues, "Now we're always going to give clients great execution. But there's definitely a put there. On the take side, maybe it's incrementally easier to move cash. I don't think it's overly hard to click one button at Schwab today and move your money from sweep into a purchase money fund. And not only that, we proactively remind you to do that when we see large balances in your account. When you log into schwab.com, it's very often the first thing you see is move your cash. So there [are] not many barriers to doing that today. It might be incrementally easier on the blockchain because you could do it instantaneously. So it's possible there's a shift there. But I think there's going to be puts and takes on the blockchain. And if clients want to participate and hold securities that way, we certainly will ... accommodate that and are working towards that."
State Street (STT) also posted its latest earnings release and hosted an earnings call recently. CEO Ron O'Hanley comments, "State Street has long been a leader in technology-driven innovation. Today, our investment services team is building on that legacy by developing the tools and client capabilities that will empower our clients to succeed in an evolving market. For example, in the digital assets ecosystem, State Street already provides fund administration and accounting services for digital assets today."
He says, "As we look ahead, we are strategically positioning State Street to be the bridge between traditional and digital finance as well as the connection point between digital asset platforms. To that end, we are excited about the forthcoming launch of our digital asset platform, which will enable tokenization of assets, funds and cash for institutional investors."
CFO John Woods tells us, "Management fees increased 16% year-over-year to a quarterly record of $612 million, primarily driven by higher average market levels and net inflows. Assets under management increased 15% year-over-year to a record $5.4 trillion, supported by higher period-end market levels and client inflows. Net inflows totaled $26 billion for the quarter, reflecting solid momentum across ETFs, cash and institutional index fixed income."
He comments, "Net interest income of $715 million was down 1% year-over-year. This performance reflects an 11 basis point decline in the net interest margin to 96 basis points, primarily driven by lower average short-end rates and deposit mix shift, partially offset by the reinvestment of securities portfolio cash flows at higher yields and higher interest-earning assets supported by higher deposit balances."
Finally, Woods says, "On a sequential basis, net interest income declined 2%, primarily due to a reduction in the interest earning assets resulting from lower deposit balances compared to elevated second quarter levels as well as lower average short-end rates. These factors were partially mitigated by the reinvestment of securities portfolio cash flows at higher yields, along with continued client-driven loan growth which contributed to an improvement in interest-earning asset mix supporting a stable net interest margin on a linked-quarter basis."
BNY released its third quarter earnings late last week, and the giant custodial bank discussed money markets, stablecoins and tokenized money markets on its earnings call. President & CEO Robin Vince tells us, "Our early commitment to the digital asset space, paired with the principles of safety, scalability and innovation that have defined BNY for centuries, now positions us to support the growing institutional adoption of digital asset products. In just one example from this past quarter, OpenEden, a leading platform for the tokenization of real-world assets, headquartered in Singapore, appointed BNY as investment manager and primary custodian for the underlying assets of its flagship Tokenized U.S. Treasury Bills Fund."
He explains, "As global capital markets move toward an always-on operating model, blockchain technology and digital asset adoption are becoming important enablers. In a meaningful step toward enhancing the utility of money market fund shares, we announced a collaborative initiative with Goldman Sachs to maintain on blockchain technology, a mirror record of customers' ownership of select money market funds, live and available through our LiquidityDirect platform. This includes a new token-enabled share class of our own BNY Investments, Dreyfus Treasury Securities Cash Management Fund. We are encouraged by developments in the U.S. regulatory landscape that will further enable tokenized products and allow us to support clients as they consider moving to a more 'on chain' financial world."
BNY CFO Dermot McDonogh comments on "Net interest income of $1.2 billion was up 18% year-over-year and up 3% quarter-over-quarter. Sequentially, net interest income increased due to reinvestment of maturing securities at higher yields, partially offset by changes in deposit mix. Average deposit balances were flat sequentially, as the typical seasonal decline over the summer was offset by idiosyncratic client balances related to CLO activity and M&A escrows. Noninterest-bearing deposits grew by 3% and interest-bearing deposits were down by 1% quarter-over-quarter. Accordingly, average interest-earning assets were also flat sequentially. Cash and reverse repo balances decreased by 2%, loans increased by 2% and investment securities balances increased by 1% quarter-over-quarter."
He continues, "Turning to Investment and Wealth Management.... In the third quarter, we saw $33 billion of net outflows from long-term strategies and $34 billion of net inflows into Cash." In response to a question, he says, "When I was going through ... what we now fondly call the 'tripod' within the firm, which is Laide, who runs our deposit platform, Tiffany, who is our Treasurer; and Jason, who is our CIO.... Our balance sheet is very clean, it's very liquid, and we talk a lot about the $1.7 trillion liquidity funnel that we have. Every day, when we come in, we see this funnel, and we can see where we can help clients maximize the return on their cash and at the same time, optimize our deposit mix and where we are."
McDonogh states, "And I think the reason for the strength in NII this quarter was really around that. And in my prepared remarks, and if you reflect back and when I talked about it on the Q2 call, we said Q3 was going to be a tough comp given last year in terms of there was a lot of activity. This year, we did see some seasonal decline in deposits, but that was more than offset by a pickup in ... capital markets activity, strong activity in the CLO space, and we're able to serve clients in a very differentiated way."
During the Q&A, David Smith of Truist Securities asks, "You mentioned some potential turbulence and headwinds to the money market ecosystem coming up right now with the rise of stablecoins on the one hand, coming amidst the backdrop of falling rates. Do you think either of these could put pressure on fee rates because this is an area of the fund space that's seen less pressure than equities and fixed income over the last decade or two?"
Vince replies, "I would not describe what's been happening as turbulence. I would regard it as, frankly, as opportunity. You're right, the money market funds have reached record levels, essentially rounding to $8 trillion, making new highs pretty much each quarter. And we're in that business, but we're in that business from lots of different angles. And I think it's worth reflecting on it for a second because we're there with our Dreyfus Money Market Funds ... rounding, call it, $450 billion. That's a significant participation. But then we're also participating with our LiquidityDirect business. We're participating with our collateral businesses. We're participating with our custody businesses. We're participating with our trustee businesses. And so, this is another example of an industry, which we touch very broadly across all of our different platforms."
He continues, "Now there's an evolution, and we're talking about on-chain capabilities for money market funds. I don't view that as a turbulence for them, I view that as a technological evolution. And the question is, do we have platforms that can serve that technological evolution? The answer is yes because of our investment in digital assets. And so our ability to help manage that transition from traditional money market funds to a more digital asset money market fund is something that we've clearly set out that we can do. And that's not dissimilar to the mutual funds to ETF to separate accounts evolution of market structure. It's not threatening when market structures evolve, unless you can't catch the next evolution. And so, we've invested to be able to catch it."
Vince then says, "Now on top of that, we now have stablecoins. And you're right, they can be a competitor to a money market fund, but they are very similar to a money market fund. Essentially, it's a collection of high-quality assets, but they have the additional feature of mobility. And we are in the mobility business because we have our Treasury Services businesses. We have our clearing businesses. We have our collateral management businesses. And so being in the transaction mobility business, actually gives us a new feature that doesn't exist for money market funds because they aren't mobile assets."
When asked if BNY would issue a stablecoin, he answers, "So we're not going to get into very specific situations about future products. But I would just pull you back to the broader comment, which is we are in the infrastructure capital markets enablement business. We're in the rails business. We partner with stablecoins. We enable other people's stablecoins. And that's really the heart of our strategy, to enable our clients with their transition into these ecosystems. We support the biggest stablecoin issuers today. There are many people who are interested in launching stablecoins. We really have the complete set of services to be able to power them."
Vince says, "And what I would expect to see over time is participants who are wanting to do their own versions of using stablecoins internally to be able to operate their companies, but they won't have the scale or the interest in creating all the infrastructure. And so they're going to turn to other stablecoin providers, and they're going to turn to partners to be able to power their own use of those things. And I think that's the sweet spot of how we think about the business opportunity."
Finally, he adds, "For us, it's about enabling the stablecoin ecosystem. And the way in which I think we're going to be able to best do that is provide the capabilities for stablecoins to be able to thrive and help other people be able to make their stablecoins thrive. Now there may be a lot of things that we have to build right up to the point of 'is it a BK stablecoin?' So, you could imagine a world where other people's stablecoins might be running on rails and capabilities that we provide, or we might be helping existing stablecoin issuers to be able to insert their products into other people's ecosystems as this connector across cash collateral, the mobility of money and then the infrastructure and capital markets. That's how I would think about it. But I'm not definitively answering your question because we'll remain agile to these questions over time."
Money fund yields (7-day, annualized, simple, net) increased by 2 bps to 3.93% on average during the week ended Friday, October 17 (as measured by our Crane 100 Money Fund Index), after falling 3 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, and they should move lower again if, as expected, the Fed cuts again on October 29. They've declined by 113 bps since the Fed first cut in the Fed funds target rate by 50 bps on Sept. 18, 2024, and they've declined by 70 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 3.82%, up 1 bp in the week through Friday. Prime Inst money fund yields were up 3 bps at 4.06% in the latest week. Government Inst MFs were up 2 bps at 3.94%. Treasury Inst MFs were unchanged at 3.85%. Treasury Retail MFs currently yield 3.62%, Government Retail MFs yield 3.65% and Prime Retail MFs yield 3.84%, Tax-exempt MF 7-day yields were down 20 bps to 2.11%.
Assets of money market funds fell by $16.6 billion last week to $7.742 trillion, according to Crane Data's Money Fund Intelligence Daily. MMF assets hit a record high of $7.773 trillion on October 9. Month-to-date in October (through 10/17), MMF assets have increased $34.3 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 (10/17), 116 money funds (out of 787 total) yield under 3.0% with $147.3 billion in assets, or 1.9%; 484 funds yield between 3.00% and 3.99% ($3.374 trillion, or 43.6%), 187 funds yield between 4.0% and 4.99% ($4.221 trillion, or 54.5%) 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 0.36%, after falling 3 bps two weeks prior. The latest Brokerage Sweep Intelligence, with data as of October 17, 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.
In other news, Payden & Rygel's Kerry Rapanot comments on Low Duration Strategies in a new press release. The Summary explains, "As the Federal Reserve cuts rates, yields on money market funds are declining. For investors seeking safety, liquidity, and enhanced income, low duration bond strategies are a compelling solution, according to Payden & Rygel's Kerry Rapanot."
She comments, "Currently, $7.7 trillion is sitting in money market funds -- an increase of $1 trillion since last year and $3 trillion since the start of the pandemic. The increased balance in money market funds has sparked speculation of a 'wall of cash' ready to deploy into equities. However, we historically see that cash does not move out of money market funds until well after the Federal Reserve starts cutting rates, so we believe this cash balance is on the stickier side. Investors able to move their cash slightly further out the curve can benefit from enhanced return potential as yields decline."
Rapanot continues, "As the Federal Reserve cuts rates, yields on money market funds are falling. Low duration bond strategies offer investors the potential to earn more than money market funds or bank deposits. Given the current inverted yield curve, low duration portfolios may have a lower portfolio yield than money market funds. However, this dynamic will change over time, as the yield curve disinverts. Despite lower current yields, the return potential of a low duration strategy is greater than a money market fund, since low duration diversifies investments across the fixed income universe and benefits from yield curve management."
She says, "Liquidity in our low duration strategy is similar to that of a money market fund as a result of the strategy holding treasuries and high-quality, top of the capital stack credit. Low duration typically invests in bonds with maturities up to five years, allowing investors to lock in longer-term yields and benefit from price appreciation as interest rates fall. Additionally, they diversify investments across the fixed income universe, from treasuries to corporate and structured bond credit, generating greater returns while maintaining liquidity."
Rapanot concludes, "While low duration strategies offer higher return potential than money market funds, they come with greater price volatility due to owning longer maturities and the inclusion of credit. However, the investments remain short-term enough to limit risk, especially as bonds quickly approach maturity and their prices pull to par, helping to stabilize returns. By its nature, a low duration portfolio should be liquid, but not every individual holding needs to be available to function as liquidity. Through active management, portfolios can maintain liquidity and participate in total return opportunities."
Barron's writes that, "Money-Market ETFs Have Arrived. Should You Buy One?" They explain, "Not too long ago, investors who wanted to park cash in an exchange-traded fund version of a money-market mutual fund had to settle for ultrashort-dated bond ETFs as a proxy. That has changed with the recent launch of a few money-market ETFs, which have quickly gained assets, even as the Federal Reserve cuts interest rates. The handful of money-market ETFs include the $3.4 billion Simplify Government Money Market, the $361.2 million iShares Prime Money Market, the $269.3 million Schwab Government Money Market, the $77.2 million iShares Government Money Market, and the $60 million Texas Capital Government Money Market, which kicked off the category when it launched in September 2024."
The piece tells us, "Their assets are still a drop in the bucket of the $7.4 trillion sitting in traditional money-market funds, according to the Investment Company Institute.... The new ETFs follow the strict Securities and Exchange Commission guidelines regulating money-market funds. Those rules mandate that the funds invest in mostly daily and weekly liquid, diversified, high-quality debt. Investors often use the funds as de facto savings accounts, so the liquidity characteristics are important. Steve Laipply, global co-head of iShares fixed-income ETFs at BlackRock, says the asset manager designed its funds for such investors."
Barron's adds, "The main difference between money-market mutual funds and their ETF counterparts is that the former have a stable $1 net asset value. Money-market ETFs trade intraday like any fixed-income ETF, so the market price may fluctuate above or below the NAV. That could affect the value of your investment when it’s time to cash out."
For more on Money Market ETFs, see these Crane Data News stories: "BlackRock Money Market ETFs Go Live; Ondo Finance on Tokenized MMFs (2/6/25), "VettaFi Discusses Money Market ETFs" (12/11/24), "Dec. MFI: Assets Break $7.0 Tril; Top 10 of 2024; BlackRock MM ETFs" (12/6/24), "BlackRock Debuts First Euro MM ETF" (12/5/24), "FT on BlackRock Money Market ETFs" (11/18/24), "November BFI: Bond Funds Hit by Election; ETF Trends MM Substitutes" (11/15/24), "BlackRock Files for Money Market ETFs" (11/12/24) and "Texas Capital Launches Govt MM ETF" (9/26/24).
In other news, J.P. Morgan recently published a piece titled, "MMF AUMs: Still here, and heading higher." It states, "The topic of MMF cash has once again come to the forefront as the Fed prepares for another round of rate cuts. This renewed attention has been driven by the persistent demand for MMFs throughout the year, resulting in record-high balances of $7.6tn.... Indeed, YTD, taxable MMF AUMs have surged by an impressive ~$580bn, mirroring the pattern observed in 2024.... Typical seasonal inflows in 4Q, combined with current interest rates, could easily push these balances towards $7.7tn or higher by year-end."
JPM continues, "However, the substantial cash held in MMFs does not necessarily imply an imminent rotation into riskier assets. While MMF cash levels are elevated in nominal terms, a broader perspective—such as comparing MMF AUMs to GDP or commercial bank deposits—reveals that these levels are not unprecedented, though they have been trending higher in recent years and are approaching peaks.... MMF AUM currently represents 24% of GDP and approximately 41% of deposits."
They say, "Furthermore, it is also important to consider the purpose for which cash is held in MMFs—whether for cash management and liquidity needs or as an investment asset class within a portfolio. Predominantly, market participants utilize MMFs for the former, viewing them as low-cost, efficient, and transparent vehicles that provide market-based returns. This is especially true for institutional MMF shareholders, such as corporations and state and local governments, who typically prioritize capital preservation over yield. Currently, $4.7 trillion of cash held in MMFs is institutional cash, and it is unlikely that this will be reallocated into equities or longer-duration fixed income."
JPM comments, "There is, however, a case to be made for potential outflows from retail MMFs. Retail investors tend to be more sensitive to interest rate changes, as evidenced by significant inflows over the past three years.... Nevertheless, we do not believe retail investors are currently overallocated to cash to the extent that a substantial rotation into other assets is necessary."
They explain, "As our equity colleagues highlight, mutual fund data -- which serves as a proxy for retail investment exposure -- shows that cash allocated to MMFs accounts for less than 20% of all mutual fund assets, while equities comprise over 60% and bonds 20%.... This suggests retail investors are not necessarily under pressure to reallocate, in contrast to the 2009–2012 period when MMFs represented 40% of mutual fund allocations."
JPM also says, "Additional factors support the likelihood that cash will remain in MMFs. Bank deposits continue to offer yields that are significantly lower than those of MMFs.... Even as the Fed begins to cut rates, the yield spread between cash and bonds is expected to remain relatively flat throughout next year, providing little incentive to extend duration.... Meanwhile, equity markets continue to reach record highs, raising concerns about potential overvaluation."
They continue, "Demographic trends, particularly as they relate to the aging U.S. population, also favor holding more cash. Anecdotally, the increasing allocation to alternative assets (e.g., private equity, private credit, etc.) as long-term investments also encourages maintaining higher levels of liquidity. Market expectations for the terminal fed funds rate have fluctuated between 2.85% and 4.19% this year, with the most recent reading at 2.98%.... Unless rates fall meaningfully below 3%, we believe MMF cash balances are unlikely to shift significantly in the near term."
JPM concludes, "Nonetheless, there remains a possibility that some cash could move out of MMFs. We are often asked how much is vulnerable to flight risk. While precise data is unavailable, we think approximately $800bn -- primarily retail cash that flooded into MMFs as the Fed raised rates, minus some of the inflows that occurred in 2023 following the regional banking crisis as investors sought diversification away from deposits -- could be at risk. However, as discussed above, whether or not this outflow materializes depends on interest rates, market conditions, and investor preferences."
A press release titled, "BlackRock Introduces '40 Act 2a7 Money Market Fund in GENIUS-aligned Form," is subtitled, "As BlackRock's cash management business surpasses $1 trillion in assets under management, the firm introduces a GENIUS Act-aligned '40 Act 2a-7 money market fund to meet growing demand in the stablecoin market." It tells us, "BlackRock announced a strategic update to one of its money market funds, reflecting a refined investment approach designed to enhance liquidity, align with emerging regulatory frameworks, and support the evolving needs of clients." (Note: As of Sept. 30, Crane Data shows BlackRock with $665.6 billion in U.S. money funds and $342.4 billion in European or "offshore" money funds, for a total of $1.008 trillion.)
The release states, "The BlackRock Select Treasury Based Liquidity Fund's ('BSTBL') new principal investment strategy is structured to increase the fund's liquidity profile by adding overnight repurchase agreements as an eligible asset, shortening the maturity of investments in U.S. Treasury instruments and removing agency investments. The fund will also provide additional access by extending the fund's trading deadline from 2:30 p.m. ET to 5:00 p.m. ET."
BlackRock's release continues, "BSTBL's investment strategy will also align with the requirements of the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act), enabling the fund to serve as a reserve asset for payment stablecoin issuers. This strategy opens a new distribution channel, positions the fund for potential future growth, and reinforces BlackRock's mission to broaden investor access through innovative solutions."
Jon Steel, Global Head of Product and Platform within BlackRock's Cash Management business, comments, "We're seeing increasing demand from stablecoin issuers and clients seeking innovative, compliant reserve management solutions. Our BSTBL money market fund builds on our history of innovation through products and marks an exciting new chapter for our cash management business. We're thrilled to deliver a fund that meets the evolving needs of our clients and we believe it positions BlackRock as one of the reserve asset managers of choice for the digital payments ecosystem."
BlackRock states, "The introduction of this updated stablecoin reserve fund reinforces BlackRock's leadership in the digital assets space. BlackRock currently manages the world's largest tokenized private fund [BUIDL] -- a short-term U.S. Treasury strategy -- alongside the largest exchange-traded products for bitcoin and ether <b:>`_. The firm also brings historical expertise in managing stablecoin reserves, further strengthening its position in the evolving digital financial ecosystem."
The release adds, "BlackRock's commitment to continually evolving its product offerings has helped drive growth in the cash management space. By integrating advanced technologies and expanding the suite of their digital asset solutions, BlackRock Cash Management has strengthened their market position as the third largest Rule 2a-7 money market fund provider in the world. The company recently introduced two new money market ETFs, namely the iShares Government Money Market ETF (GMMF) and the iShares Prime Money Market ETF (PMMF), to further broaden investor access and deliver innovative cash management solutions that meet investors where they are."
Finally, it tells us, "In the Earnings Report that was released on October 14, BlackRock announced that its Cash Management business has surpassed the $1 trillion milestone in assets under management, reaching an unprecedented $1,005 billion. This achievement marks a new record for the firm and underscores BlackRock’s leadership in the liquidity management sector."
For more on Stablecoin Reserve funds, see these Crane Data News stories: "Capital Advisors Group's Pan Comments on Laddered SMAs, Stablecoins" (10/6/25), "More Liberty Street Economics: Cautionary Historical Tale on Stablecoins" (10/2/25), "IMMFA on Tokenization of MMFs in Europe; Tether USDT; Fidelity Digital" (9/22/25), "Sept. MFI: Assets Break $7.6T; Stablecoin Reserves; JPM on Offshore MFs" (9/8/25), "Goldman Sachs: Summer of Stablecoin; FT: Banks Lobby to Block Interest" (8/26/25), "FOMC Minutes: RRP, Bills, Stablecoins" (8/21/25), "BNY Dreyfus to Launch Stablecoin Reserves Fund; Joins Goldman, Circle" (8/20/25), "Goldman Files to Launch Stablecoin Reserves Fund; Circle Q2 Earnings" (8/13/25), "August MFI: BNY Portal Tokenizes; ICD's Tory Hazard; Stablecoins in Q2" (8/7/25) and our "BNY's LiquidityDirect Portal Announces Plans to Tokenize Money Funds" (7/24/25).
BlackRock released its Q3'25 earnings earlier this week, and on its earnings call CFO Martin Small comments, "Nonoperating results for the quarter included $84 million of net investment losses, primarily due to a mark-to-market noncash loss linked to our minority investment in Circle.... Our work with clients spans their entire portfolios from long-dated private market exposures to more near-term liquidity needs <b:>. Our cash management platform recently crossed $1 trillion in AUM, with $34 billion of net inflows in the quarter. The platform has grown 45% in just the last 3 years. We're seeing demand across scaled money market funds, customized and tokenized liquidity products and money market ETFs. And our partnership with Circle as the primary manager of their cash reserves is driving meaningful growth. Our mandate surpassed $64 billion this quarter."
During the Q&A, Morgan Stanley's Michael Cyprys asks, "Just wanted to ask about tokenization. I was hoping you could talk about your ambitions and steps that you're taking there, including how you might go about tokenizing ETFs. You already have the tokenizes money fund with BUIDL."
CEO Larry Fink responds, "So first of all, this is probably one of the most exciting potential markets for BlackRock. Let's just start off with our global footprint, with our scale operation in ETFs worldwide and our leading position in terms of digital assets we already are part of. We are having conversations with all the major platforms today about how can we move forward on the whole digitization and tokenization of traditional assets so they could play a role in the role of digital wallets."
Crane Data's latest Money Fund Intelligence International shows that assets in European or "offshore" money market mutual funds increased over the past 30 days to a new record high $1.558 trillion, rising from $1.543 trillion the month prior. Yields inched lower, while assets for USD and EUR MMFs rose and GBP MMFs fell over the past month. Like U.S. money fund assets, European MMFs repeatedly hit record highs in 2023, 2024 and 2025 (after a pause in Q2). These U.S.-style money funds, domiciled in Ireland or Luxembourg and denominated in US Dollars, Pound Sterling and Euros, increased by $15.3 billion over the 30 days through 10/14. The totals are up $125.5 billion (8.8%) year-to-date for 2025, they were up $235.3 billion (19.7%) for 2024 and up $166.9 billion (16.2%) for the year 2023. (Note that currency moves in the U.S. Dollar cause Euro and Sterling totals to shift when they're translated back into totals in USD. See our latest MFI International for more on the "offshore" money fund marketplace. These funds are only available to qualified, non-U.S. investors and are almost entirely institutional.)
Offshore US Dollar money funds increased $17.1 billion over the last 30 days and are up $97.2 billion YTD to $840.8 billion; they increased $94.1 billion in 2024. Euro funds increased E3.9 billion over the past month. YTD, they're up E17.5 billion to E335.3 billion, for 2024, they increased by E82.9 billion. GBP money funds decreased L4.7 billion over 30 days, and they're up L15.7 billion YTD at L270.3B, for 2024, they rose L19.3 billion. U.S. Dollar (USD) money funds (271) account for over half (54.0%) of the "European" money fund total, while Euro (EUR) money funds (190) make up 23.5% and Pound Sterling (GBP) funds (183) total 22.6%. We summarize our latest "offshore" money fund statistics and our Money Fund Intelligence International Portfolio Holdings (which went out to subscribers Wednesday), below.
Offshore USD MMFs yield 4.04% (7-Day) on average (as of 10/14/25), down 17 bps from a month earlier. Yields averaged 4.20% on 12/30/22 and 0.03% on 12/31/21. EUR MMFs, which left negative yield territory in the second half of 2022, yield 1.90% on average, down 1 bp from a month ago and up from 1.48% on 12/30/22 and -0.80% on 12/31/21. Meanwhile, GBP MMFs broke above the 5.0% barrier 26 months ago, but they broke back below 5.0% 15 months ago. They now yield 3.97%, down 2 bps from a month ago, but up from 3.17% on 12/30/22. Sterling yields were 0.01% on 12/31/21.
Crane's October MFI International Portfolio Holdings, with data as of 9/30/25, show that European-domiciled US Dollar MMFs, on average, consist of 30% in Commercial Paper (CP), 16% in Certificates of Deposit (CDs), 24% in Repo, 18% in Treasury securities, 10% in Other securities (primarily Time Deposits) and 2% in Government Agency securities. USD funds have on average 46.7% of their portfolios maturing Overnight, 4.8% maturing in 2-7 Days, 8.6% maturing in 8-30 Days, 8.8% maturing in 31-60 Days, 6.3% maturing in 61-90 Days, 15.8% maturing in 91-180 Days and 8.9% maturing beyond 181 Days. USD holdings are affiliated with the following countries: the U.S. (37.8%), Canada (11.5%), France (9.7%), Japan (8.8%), the Netherlands (5.1%), Australia (5.1%), the U.K. (4.2%), Germany (4.2%), Sweden (3.5%) and Finland (2.4%).
The 10 Largest Issuers to "offshore" USD money funds include: the US Treasury with $151.4B (18.3%), Fixed Income Clearing Corp with $37.7B (4.6%), JP Morgan with $30.5B (3.7%), RBC with $25.0B (3.0%), Credit Agricole with $20.7B (2.5%), Toronto-Dominion Bank with $18.4B (2.2%), Mizuho Corporate Bank Ltd with $17.8B (2.2%), Nordea Bank with $17.7B (2.1%), Wells Fargo with $17.7B (2.1%) and Bank of America with $15.6B (1.9%).
Euro MMFs tracked by Crane Data contain, on average 38% in CP, 23% in CDs, 15% in Other (primarily Time Deposits), 21% in Repo, 3% in Treasuries and 0% in Agency securities. EUR funds have on average 40.2% of their portfolios maturing Overnight, 6.5% maturing in 2-7 Days, 10.3% maturing in 8-30 Days, 12.0% maturing in 31-60 Days, 7.0% maturing in 61-90 Days, 16.7% maturing in 91-180 Days and 7.4% maturing beyond 181 Days. EUR MMF holdings are affiliated with the following countries: France (28.9%), the U.S. (10.3%), Japan (10.3%), Canada (9.4%), the Netherlands (6.3%), Germany (5.9%), the U.K. (5.6%), Australia (3.7%), Sweden (3.3%) and Finland (3.3%).
The 10 Largest Issuers to "offshore" EUR money funds include: BNP Paribas with E16.6B (5.8%), Credit Agricole with E16.3B (5.7%), JP Morgan with E12.8B (4.5%), Societe Generale with E10.2B (3.6%), Agence Central de Organismes de Securite Sociale with E9.0B (3.2%), ING Bank with E8.9B (3.1%), Republic of France with E8.7B (3.0%), Sumitomo Mitsui Banking Corp with E8.2B (2.9%), Bank of Nova Scotia with E7.6B (2.7%) and BPCE SA with E6.9B (2.4%).
The GBP funds tracked by MFI International contain, on average (as of 9/30/25): 37% in CDs, 19% in CP, 21% in Other (Time Deposits), 18% in Repo, 4% in Treasury and 1% in Agency. Sterling funds have on average 36.7% of their portfolios maturing Overnight, 6.7% maturing in 2-7 Days, 8.8% maturing in 8-30 Days, 14.0% maturing in 31-60 Days, 7.4% maturing in 61-90 Days, 19.6% maturing in 91-180 Days and 6.8% maturing beyond 181 Days. GBP MMF holdings are affiliated with the following countries: Japan (15.3%), France (14.2%), Canada (13.1%), the U.K. (12.2%), the U.S. (10.7%), Australia (8.0%), the Netherlands (4.3%), Singapore (4.0%), Finland (2.8%) and Spain (2.7%).
The 10 Largest Issuers to "offshore" GBP money funds include: UK Treasury with L13.2B (6.1%), Mizuho Corporate Bank Ltd with L9.4B (4.4%), RBC with L8.9B (4.1%), BNP Paribas with L8.9B (4.1%), Sumitomo Mitsui Trust Bank with L7.7B (3.6%), JP Morgan with L7.6B (3.6%), Sumitomo Mitsui Banking Corp with L7.0B (3.3%), Bank of Nova Scotia with L6.3B (2.9%), National Australia Bank Ltd with L6.1B (2.8%) and Mitsubishi UFJ Financial Group Inc with L6.0B (2.8%).
The October issue of our Bond Fund Intelligence, which was sent to subscribers Wednesday a.m., features the stories, "Worldwide BF Assets Jump to $15.2 Trillion, Led by US, China," which reviews the latest global bond fund statistics from ICI; and "Lupini, Rustam Talk European Ultra-Shorts at EMFS Dublin," which highlights a session from our 11th annual European Money Fund Symposium held in Dublin, Ireland. BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns rose again in September while yields fell. 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.)
BFI's lead article states, "Bond fund assets worldwide increased in the latest quarter to $15.173 trillion, led higher by the U.S., China, Luxembourg and Ireland. We review the ICI's 'Worldwide Regulated Open-End Fund Assets and Flows, Second Quarter 2025' release and statistics below."
It continues, "ICI's report says, 'Worldwide regulated open-end fund assets, excluding assets in funds of funds, increased 8.5% to $80.85 trillion at the end of the second quarter of 2025.... The Investment Company Institute compiles worldwide regulated open-end fund statistics on behalf of the International Investment Funds Association (IIFA).'"
Our "Lupini, Rustam" article states, "Crane Data recently hosted its 11th annual European Money Fund Symposium in Dublin, Ireland, which featured near-record attendance (195) and two days of discussions on offshore money funds denominated in USD, EUR and GBP. The event also included the session, 'Ultra-Short Bond Funds, ETF MMFs & Alt-Cash,' featuring Valerio Lupini of Fitch Ratings and Rustam Muradov of J.P. Morgan Asset Management."
It continues, "Lupini says, 'With EU money market funds, short-term and standard money market funds are governed by regulations, so they have specific maturity, liquidity, and credit quality requirements. On the other side, short-term bond funds are not regulated under the money market fund framework, which gives them greater flexibility.'"
Our first News brief, "Returns Jump, Yields Drop Again in Sept.," says, "Bond fund returns were higher in September after also jumping in August. Our BFI Total Index rose 1.01% over 1-month and rose 3.96% over 12 months. (Money funds rose 4.31% over 1-year as measured by our Crane 100 Index.) The BFI 100 increased 0.92% in Sept. and rose 4.13% over 12 mos. Our BFI Conservative Ultra-Short Index was up 0.47% over 1-month and 4.66% for 1-year; Ultra-Shorts rose 0.37% and 4.84%. Short-Term gained 0.33% and 4.86%, and Intm-Term jumped 0.96% in Sept. and rose 3.59% over 12 mos. BFI's Long-Term Index was up 1.38% and up 2.97%. High Yield returned 0.76% in Sept. and 6.45% over 12 months."
A second News brief, "SSIM to Launch Ultra-Short T-Bill ETF," says, "A press release, 'State Street Investment Management Enhances Its Low-Cost State Street SPDR Portfolio ETF Suite,' comments, 'State Street Investment Management today announced the expansion of its low-cost State Street SPDR Portfolio ETF Suite with the launch of the State Street SPDR Portfolio Ultra Short T-Bill ETF (SPTU). The new fund offers investors access to the shorter end of the yield curve by providing exposure to US Treasury bills that have a remaining maturity greater than or equal to 1 month and less than 12 months. Priced at just five basis points, SPTU is one of the lowest-cost ETFs in the ultra-short Treasury bond fund category.'"
Another brief, "Morningstar: 'US Fund Flows: Investors Pour $77 Billion into Funds in August, But Not Where You'd Expect,' writes, 'US investors kept leaning away from risk in August 2025 as they put $77 billion to work in mainly fixed-income open-end funds and ETFs. Taxable-bond funds led, with their largest inflows since April 2021.... Investors also continued to move into cash.... In August, taxable-bond funds experienced their largest monthly inflow since April 2021. Conservative categories like intermediate core bond and ultrashort bond led the way, each accruing over $10 billion in assets for the month. Corporate-bond funds experienced their largest monthly inflow since June 2020.'"
A BFI sidebar, "Barron's on Multisector BFs," says, "A Barron's article, ‘5 Multisector Bond Funds for Diversification and Income,' says, 'It's been a tricky time for bond investors this year. Credit spreads are tight in sectors such as investment-grade credit and high-yield bonds, a testament to lofty valuations. The Federal Reserve is expected to continue cutting interest rates.... That's why it makes sense for income investors to spread their bets across a variety of bond categories as a way to reduce risk. Multisector bond funds are one way to do that.'"
Finally, another sidebar, "New Vanguard High-Yield ETF," notes, "A press release, 'Vanguard Launches Its First Actively Managed High-Yield Bond ETF,' explains, 'Vanguard ... launched Vanguard High-Yield Active ETF (VGHY), an active fixed income ETF managed by Vanguard Fixed Income Group.'"
The Bank of Canada published, "An update on the Canadian money market mutual fund sector," which tells us, "Money market mutual funds, also called money market funds (MMFs), are open-ended mutual funds that hold cash and invest in short-term, high-quality debt securities. They aim to provide their investors with stable returns and high liquidity and allow the daily withdrawal of funds. Investors use MMFs for different reasons, including: to park cash between investments; to place their money in a safe investment during periods of market turmoil; and, to earn higher interest than traditional deposit accounts. MMFs facilitate credit intermediation by moving cash from households and institutions to borrowers such as governments and corporations. Thus, they provide an important source of short-term funding."
The report says, "Despite their benefits, MMFs can pose vulnerabilities to the financial system, particularly through: Liquidity mismatch: MMFs offer daily redemptions, but some of their assets may be difficult to sell quickly without losses during periods of market stress; and, First-mover advantage: Liquidity mismatch can motivate investors to redeem ahead of others to avoid potential losses from funds selling assets at discounted prices to meet redemptions."
It continues, "In several notable cases, these vulnerabilities have resulted in MMFs amplifying market stresses. For instance, during both the 2008–09 global financial crisis and the onset of the COVID-19 pandemic, some MMFs in the United States faced sudden and large investor withdrawals (Anadu et al. 2021). These outflows led those MMFs to sell their holdings in secondary markets. This likely contributed to liquidity strains in short-term funding markets and reduced the capacity of MMFs to fund governments and corporations."
The Bank writes, "In response to instances like these, the Financial Stability Board (FSB) launched a comprehensive review of MMF vulnerabilities. This review resulted in policy recommendations aimed at enhancing MMFs' resilience. Since then, MMFs have remained a global focus for financial stability, and the FSB has been tracking the progress on implementing the recommendations across jurisdictions (FSB 2021; FSB 2024)."
They state, "In light of the global attention on MMFs, we examine the Canadian MMF sector. This sector has grown by 180% since 2019, yet it remains less than 3% of the overall Canadian mutual fund sector. Despite the small size of the MMF sector, MMFs hold around 5% of Government of Canada (GoC) treasury bills and 11% of non-government short-term paper. The relatively large presence of MMFs in these markets suggests that MMFs could have a significant impact on liquidity conditions."
The piece adds, "However, during the market turmoil in March 2020, when MMF outflows in several jurisdictions around the world amplified market stress, Canadian MMFs experienced inflows. This relative stability may reflect the fact that, compared with other jurisdictions, Canada's MMF sector has a larger share of retail investors. Retail investors may have more stable behaviour than institutional investors, who may liquidate their MMF positions relatively quickly because of a sudden need for cash."
It says, "Our analysis aligns with earlier work done by the FSB in which Canada was not identified as a jurisdiction where MMF vulnerabilities could raise significant financial stability concerns. However, given the ongoing international focus on MMFs and their growing role in key short-term funding markets, Bank of Canada staff will continue to periodically review the sector."
The Bank of Canada study states, "In Canada, MMF assets have grown by 180% since 2019, exceeding the growth rates of life insurers, pension funds and other types of mutual funds.... The size of MMFs has generally moved in line with the Bank's target for the policy rate, suggesting that their recent growth could be related to higher interest rates.... However, this trend appears to correlate with some lag, and there have been some brief periods -- particularly during times of high market turmoil -- when this relationship was less clear. Although the policy rate has been declining since mid-2024, the amount of MMF assets has continued to increase, likely because interest rates remain high relative to historical levels."
It says, "High interest rates raise the opportunity cost of holding cash in deposit accounts at commercial banks, which typically offer low interest rates. When rates are high, investors are more likely to shift their cash into investment products that: have returns that more closely track the level of interest rates than deposit accounts at commercial banks do; and, remain liquid compared with other investment products."
They comment, "Indeed, during the recent years of higher interest rates, while MMF assets grew, so did other comparable products such as guaranteed investment certificates and high-interest savings account exchange-traded funds. Despite their rapid growth, MMFs remain relatively small, with total assets around $100 billion.... This represents only about 3% of the overall Canadian mutual fund sector."
Finally, the study tells us, "Within MMFs' holdings of non-government short-term paper, commercial paper has represented an increasingly large share since the phase-out of the Canadian bankers' acceptance (BA) market (CFIF 2023). From 2022 to 2023, MMFs allocated between 10% and 20% of their assets to BAs. However, starting in June 2023, MMFs reduced their holdings of BAs and simultaneously increased their holdings of commercial paper from around 45% to 60% of their assets.... Overall, MMFs' growing presence in the GoC treasury bill and commercial paper markets suggests that liquidity in these short-term funding markets could be vulnerable to the trading activity of MMFs, particularly in scenarios where MMFs may sell these assets to meet investor withdrawals."
Crane Data's October Money Fund Portfolio Holdings, with data as of Sept. 30, 2025, show that holdings of Repo and Treasuries both jumped. Money market securities held by Taxable U.S. money funds (tracked by Crane Data) increased by $56.1 billion to $7.595 trillion in September, after increasing $166.6 billion in August, $17.6 billion in July, $84.0 billion in June and $72.0 billion in May. They decreased by $73.8 billion in April. Assets rose by $45.6 billion in March, $53.7 billion in February, $84.1 billion in January and $88.0 billion in December. Treasuries, the largest portfolio composition segment, increased by $78.0 billion. Repo, the second largest segment, increased $27.2 billion in September. Agencies were the third largest segment, and CP remained fourth, ahead of CDs, Other/Time Deposits and VRDNs. Below, we review our Money Fund Portfolio Holdings statistics. (Visit our Content center to download, or contact us to request our latest Portfolio Holdings reports.)
Among taxable money funds, Repurchase Agreements (repo) increased $27.2 billion (1.0%) to $2.763 trillion, or 36.4% of holdings, in September, after decreasing $236.2 billion in August, decreasing $128.1 billion in July, increasing $194.2 billion in June and increasing $63.3 billion in May. Treasury securities increased $78.0 billion (2.5%) to $3.217 trillion, or 42.4% of holdings, after increasing $414.3 billion in August, increasing $117.3 billion in July, decreasing $98.4 billion in June and decreasing $2.1 billion in May. Government Agency Debt was up $22.8 billion, or 2.4%, to $990.2 billion, or 13.0% of holdings. Agencies decreased $18.7 billion in august, increased $0.8 billion in July, $8.8 billion in June and $4.8 billion in May. Repo, Treasuries and Agency holdings now total $6.970 trillion, representing 91.8% of all taxable holdings.
Money fund holdings of CP and CDs fell while Other (Time Deposits) also fell in September. Commercial Paper (CP) decreased $18.3 billion (-5.7%) to $303.4 billion, or 4.0% of holdings. CP holdings increased $7.6 billion in August, increased $12.3 billion in July and decreased $9.7 billion in June. Certificates of Deposit (CDs) decreased $16.5 billion (-8.0%) to $189.4 billion, or 2.5% of taxable assets. CDs increased $3.4 billion in August, increased $1.9 billion in July and decreased $2.1 billion in June. Other holdings, primarily Time Deposits, decreased $36.8 billion (-23.9%) to $117.0 billion, or 1.5% of holdings, after decreasing $4.4 billion in August, increasing $13.0 billion in July and decreasing $8.7 billion in June. VRDNs decreased to $15.2 billion, or 0.2% of assets. (Note: This total is VRDNs for taxable funds only. We will post our Tax Exempt MMF holdings separately Friday around noon.)
Prime money fund assets tracked by Crane Data increased to $1.320 trillion, or 17.4% of taxable money funds' $7.595 trillion total. Among Prime money funds, CDs represent 14.4% (down from 15.7% a month ago), while Commercial Paper accounted for 23.0% (down from 24.5% a month ago). The CP totals are comprised of: Financial Company CP, which makes up 14.3% of total holdings, Asset-Backed CP, which accounts for 7.2%, and Non-Financial Company CP, which makes up 1.6%. Prime funds also hold 0.5% in US Govt Agency Debt, 7.2% in US Treasury Debt, 24.4% in US Treasury Repo, 1.3% in Other Instruments, 5.5% in Non-Negotiable Time Deposits, 9.2% in Other Repo, 13.4% in US Government Agency Repo and 0.9% in VRDNs.
Government money fund portfolios totaled $4.143 trillion (54.5% of all MMF assets), up from $4.100 trillion in August, while Treasury money fund assets totaled another $2.132 trillion (28.1%), up from $2.131 trillion the prior month. Government money fund portfolios were made up of 23.8% US Govt Agency Debt, 17.5% US Government Agency Repo, 35.2% US Treasury Debt, 23.0% in US Treasury Repo, 0.4% in Other Instruments. Treasury money funds were comprised of 78.0% US Treasury Debt and 21.9% in US Treasury Repo. Government and Treasury funds combined now total $6.275 trillion, or 82.6% of all taxable money fund assets.
European-affiliated holdings (including repo) decreased by $107.9 billion in September to $649.2 billion; their share of holdings fell to 8.6% from last month's 10.0%. Eurozone-affiliated holdings decreased to $446.9 billion from last month's $519.4 billion; they account for 5.9% of overall taxable money fund holdings. Asia & Pacific related holdings were down at $339.4 billion (4.5% of the total) from last month's $357.5 billion. Americas related holdings rose to $6.602 trillion from last month's $6.419 trillion; they now represent 86.9% of holdings.
The overall taxable fund Repo totals were made up of: US Treasury Repurchase Agreements (up $33.6 billion, or 2.0%, to $1.741 trillion, or 22.9% of assets); US Government Agency Repurchase Agreements (down $11.1 billion, or -1.2%, to $900.3 billion, or 11.9% of total holdings), and Other Repurchase Agreements (up $4.7 billion, or 4.0%, to $121.8 billion, or 1.6% of holdings). The Commercial Paper totals were comprised of Financial Company Commercial Paper (down $11.1 billion to $188.1 billion, or 2.5% of assets), Asset-Backed Commercial Paper (down $1.0 billion to $94.9 billion, or 1.2%), and Non-Financial Company Commercial Paper (down $6.2 billion to $20.5 billion, or 0.3%).
The 20 largest Issuers to taxable money market funds as of Sept. 30, 2025, include: the US Treasury ($3.217T, 42.4%), Fixed Income Clearing Corp ($1.117T, 14.7%), Federal Home Loan Bank ($702.7B, 9.3%), JP Morgan ($277.3B, 3.7%), RBC ($225.1B, 3.0%), Federal Farm Credit Bank ($181.6B, 2.4%), BNP Paribas ($162.3B, 2.1%), Wells Fargo ($148.2B, 2.0%), Citi ($146.6B, 1.9%), Bank of America ($103.8B, 1.4%), Sumitomo Mitsui Banking Corp ($97.9B, 1.3%), Barclays PLC ($93.9B, 1.2%), Federal Home Loan Mortgage Corp ($68.8B, 0.9%), Mitsubishi UFJ Financial Group Inc ($67.7B, 0.9%), Credit Agricole ($64.9B, 0.9%), Canadian Imperial Bank of Commerce ($60.2B, 0.8%), Toronto-Dominion Bank ($55.7B, 0.7%), Bank of Montreal ($52.9B, 0.7%), Goldman Sachs ($51.0B, 0.7%) and Societe Generale ($47.8B, 0.6%).
In the repo space, the 10 largest Repo counterparties (dealers) with the amount of repo outstanding and market share (among the money funds we track) include: Fixed Income Clearing Corp ($1.093T, 39.6%), JP Morgan ($262.8B, 9.5%), RBC ($177.8B, 6.4%), BNP Paribas ($151.2B, 5.5%), Wells Fargo ($147.0B, 5.3%), Citi ($135.7B, 4.9%), Sumitomo Mitsui Banking Corp ($83.6B, 3.0%), Bank of America ($74.4B, 2.7%), Barclays PLC ($74.4B, 2.7%) and Goldman Sachs ($50.5B, 1.8%).
The largest users of the $22.0 billion in Fed RRP include: Goldman Sachs FS Treas Sol ($4.7B), Vanguard Market Liquidity Fund ($4.5B), Columbia Short-Term Cash Fund ($3.4B), T Rowe Price Govt Reserve Fund ($1.9B), American Funds Central Cash ($1.5B), UBS Select Treasury Fund ($1.5B), UBS Prime Fund ($1.3B), UBS RMA Govt MM ($1.0B), Morgan Stanley Inst Liq Govt Sec ($0.8B) and Vanguard Federal Money Mkt Fund ($0.5B).
The 10 largest issuers of "credit" -- CDs, CP and Other securities (including Time Deposits and Notes) combined -- include: RBC ($47.4B, 8.6%), Toronto-Dominion Bank ($34.4B, 6.3%), Bank of America ($29.4B, 5.4%), Mitsubishi UFJ Financial Group Inc ($24.4B, 4.4%), Mizuho Corporate Bank Ltd ($23.5B, 4.3%), Fixed Income Clearing Corp ($23.3B, 4.3%), Barclays PLC ($19.5B, 3.6%), Bank of Montreal ($19.5B, 3.6%), ING Bank ($19.4B, 3.5%) and Canadian Imperial Bank of Commerce ($17.6B, 3.2%).
The 10 largest CD issuers include: Bank of America ($15.7B, 8.3%), Mitsubishi UFJ Financial Group Inc ($15.0B, 7.9%), Toronto-Dominion Bank ($13.9B, 7.3%), Mizuho Corporate Bank Ltd ($13.5B, 7.1%), Sumitomo Mitsui Banking Corp ($13.2B, 7.0%), Sumitomo Mitsui Trust Bank ($13.2B, 7.0%), Credit Agricole ($10.4B, 5.5%), Mitsubishi UFJ Trust and Banking Corporation ($8.8B, 4.6%), Canadian Imperial Bank of Commerce ($7.3B, 3.9%) and Barclays PLC ($6.3B, 3.3%).
The 10 largest CP issuers (we include affiliated ABCP programs) include: RBC ($31.9B, 11.4%), Toronto-Dominion Bank ($20.4B, 7.3%), JP Morgan ($14.5B, 5.2%), Bank of Montreal ($13.8B, 4.9%), Barclays PLC ($12.9B, 4.6%), Mitsubishi UFJ Financial Group Inc ($9.3B, 3.3%), National Bank of Canada ($8.9B, 3.2%), ING Bank ($8.5B, 3.0%), Canadian Imperial Bank of Commerce ($8.2B, 2.9%) and Northcross Capital Management ($7.7B, 2.8%).
The largest increases among Issuers include: Fixed Income Clearing Corp (up $154.4B to $1.117T), the US Treasury (up $78.0B to $3.217T), RBC (up $14.3B to $225.1B), Federal Home Loan Mortgage Corp (up $11.9B to $68.8B), Wells Fargo (up $10.8B to $148.2B), Federal Farm Credit Bank (up $7.7B to $181.6B), Lloyds Banking Group (up $3.9B to $11.6B), JP Morgan (up $2.9B to $277.3B), Federal National Mortgage Association (up $2.9B to $33.4B) and Mitsubishi UFJ Financial Group Inc (up $2.4B to $67.7B).
The largest decreases among Issuers of money market securities (including Repo) in September were shown by: Citi (down $36.0B to $146.6B), the Federal Reserve Bank of New York (down $32.9B to $22.0B), Goldman Sachs (down $15.3B to $51.0B), Barclays PLC (down $15.2B to $93.9B), Credit Agricole (down $12.4B to $64.9B), BNP Paribas (down $9.5B to $162.3B), Skandinaviska Enskilda Banken AB (down $9.2B to $9.7B), Societe Generale (down $9.1B to $47.8B), Mizuho Corporate Bank Ltd (down $8.0B to $40.9B) and Australia & New Zealand Banking Group Ltd (down $6.9B to $26.3B).
The United States remained the largest segment of country-affiliations; it represents 81.2% of holdings, or $6.164 trillion. Canada (5.8%, $437.8B) was in second place, while France (4.2%, $321.3B) was No. 3. Japan (3.6%, $275.4B) occupied fourth place. The United Kingdom (2.2%, $164.0B) remained in fifth place. Netherlands (0.7%, $51.0B) was in sixth place, followed by Australia (0.6%, $44.2B), Germany (0.5%, $37.3B), Spain (0.5%, $36.9B), and Sweden (0.3%, $23.0B). (Note: Crane Data attributes Treasury and Government repo to the dealer's parent country of origin, though money funds themselves "look-through" and consider these U.S. government securities. All money market securities must be U.S. dollar-denominated.)
As of Sept. 30, 2025, Taxable money funds held 45.1% (down from 47.5%) of their assets in securities maturing Overnight, and another 11.0% maturing in 2-7 days (up from 9.1%). Thus, 56.1% in total matures in 1-7 days. Another 11.5% matures in 8-30 days, while 9.8% matures in 31-60 days. Note that over three-quarters, or 77.4% of securities, mature in 60 days or less, the dividing line for use of amortized cost accounting under SEC regulations. The next bucket, 61-90 days, holds 5.7% of taxable securities, while 11.8% matures in 91-180 days, and just 5.2% matures beyond 181 days.
Crane Data's latest monthly Money Fund Portfolio Holdings statistics will be sent out Thursday, and we'll be writing our regular monthly update on the new October data for Friday's News. But we also already uploaded a separate and broader Portfolio Holdings data set based on the SEC's Form N-MFP filings on Wednesday. (We continue to merge the two series, and the N-MFP version is now available via our Portfolio Holdings file listings to Money Fund Wisdom subscribers.) Our new N-MFP summary, with data as of September 30, includes holdings information from 971 money funds (down 17 from last month), representing assets of $7.766 trillion (up from $7.701 trillion a month ago). Prime MMFs rose to $1.206 trillion (up from $1.193 trillion), or 15.5% of the total. We review the new N-MFP data and we also look at our revised MMF expense data, which shows charged expenses were mostly flat and money fund revenues rose to $20.5 billion (annualized) in September.
Our latest Form N-MFP Summary for All Funds (taxable and tax-exempt) shows Treasuries and Repurchase Agreements (Repo) remain the largest types of portfolio holdings in money market funds. Treasury holdings in money market funds now total $3.230 trillion (up from $3.146 trillion), or 41.6% of all assets, while Repo holdings rose to $2.771 trillion (up from $2.743 trillion), or 35.7% of all holdings. Government Agency securities total $997.5 billion (up from $974.0 billion), or 12.8%. Holdings of Treasuries, Government agencies and Repo (almost all of which is backed by Treasuries and agencies) combined total $6.999 trillion, or a massive 90.1% of all holdings.
The Other category (primarily Time Deposits) totals $125.7 billion (down from $161.8 billion), or 1.6%, and Commercial Paper (CP) totals $313.2 billion (down from $331.7 billion), or 4.0% of all holdings. Certificates of Deposit (CDs) total $189.1 billion (down from $205.3 billion), 2.4%, and VRDNs account for $139.7 billion (up from $139.0 billion), or 1.8% of money fund securities.
Broken out into the SEC's more detailed categories, the CP totals were comprised of: $188.1 billion, or 2.4%, in Financial Company Commercial Paper; $94.8 billion, or 1.2%, in Asset Backed Commercial Paper; and $30.3 billion, or 0.4%, in Non-Financial Company Commercial Paper. The Repo totals were made up of: U.S. Treasury Repo ($1.767 trillion, or 22.8%), U.S. Govt Agency Repo ($876.3 billion, or 11.3%) and Other Repo ($127.5 billion, or 1.6%).
The N-MFP Holdings summary for the Prime Money Market Funds shows: CP holdings of $271.4 billion (down from $289.5 billion), or 22.5%; Repo holdings of $576.0 billion (up from $483.9 billion), or 47.7%; Treasury holdings of $95.4 billion (down from $107.8 billion), or 7.9%; CD holdings of $163.3 billion (down from $179.0 billion), or 13.5%; Other (primarily Time Deposits) holdings of $83.4 billion (down from $114.8 billion), or 6.9%; Government Agency holdings of $6.1 billion (down from $6.6 billion), or 0.5%; and VRDN holdings of $10.8 billion (down from $11.2 billion), or 0.9%.
The SEC's more detailed categories show CP in Prime MMFs made up of: $168.6 billion (down from $179.7 billion), or 14.0%, in Financial Company Commercial Paper; $83.3 billion (down from $84.3 billion), or 6.9%, in Asset Backed Commercial Paper; and $19.5 billion (up from $25.5 billion), or 1.6%, in Non-Financial Company Commercial Paper. The Repo totals include: U.S. Treasury Repo ($295.1 billion, or 24.5%), U.S. Govt Agency Repo ($169.0 billion, or 14.0%), and Other Repo ($111.9 billion, or 9.3%).
In related news, money fund charged expense ratios (Exp%) were mostly flat in September. Our Crane 100 Money Fund Index and Crane Money Fund Average were 0.27% and 0.37%, respectively, as of September 30, 2025. Crane Data revises its monthly expense data and gross yield information after the SEC updates its latest Form N-MFP data the morning of the 6th business day of the new month. (They posted this info Wednesday morning, so we revised our monthly MFI XLS spreadsheet and historical craneindexes.xlsx averages file to reflect the latest expenses, gross yields, portfolio composition and maturity breakout.) Visit our "Content" page for the latest files.
Our Crane 100 Money Fund Index, a simple average of the 100 largest taxable money funds, shows an average charged expense ratio of 0.27%, up 1 bp from last month's level (also 19 bps higher than 12/31/21's 0.08%). The Crane Money Fund Average, a simple average of all taxable MMFs, showed a charged expense ratio of 0.37% as of September 30, 2025, unchanged from the month prior and slightly below the 0.40% at year-end 2019.
Crane Data's latest monthly Money Fund Market Share rankings show assets sharply higher among the largest U.S. money fund complexes in September after also jumping in August. Assets have increased in 14 of the past 15 months (only April 2025 saw a decline). Money market fund assets rose by $100.6 billion, or 1.3%, last month to a record $7.708 trillion. Total MMF assets have increased by $294.2 billion, or 4.0%, over the past 3 months, and they've increased by $934.4 billion, or 13.8%, over the past 12 months. The largest increases among the 25 largest managers last month were seen by State Street, Fidelity, BNY Dreyfus, Goldman Sachs and JPMorgan, which grew assets by $28.7 billion, $25.5B, $12.4B, $12.3B and $12.1B, respectively. Declines in September were seen by DWS, American Funds, AllianceBernstein, Invesco and Columbia, which decreased by $6.8 billion, $3.3B, $2.4B, $2.4B and $1.9B, respectively. Our domestic U.S. "Family" rankings are available in our MFI XLS product, our global rankings are available in our MFI International product. The combined "Family & Global Rankings" are available to Money Fund Wisdom subscribers. We review the latest market share totals, and look at money fund yields, which were lower in September.
Over the past year through Sept. 30, 2025, Fidelity (up $207.9B, or 14.7%), JPMorgan (up $136.8B, or 19.8%), Schwab (up $104.5B, or 18.6%), Vanguard (up $91.1B, or 14.7%) and BlackRock (up $88.0B, or 15.2%) were the largest gainers. Fidelity, JPMorgan, BNY Dreyfus, BlackRock and Federated Hermes had the largest asset increases over the past 3 months, rising by $73.8B, $51.3B, $28.5B, $25.8B and $23.3B, respectively. The largest declines over 12 months was seen by: Columbia (down $3.2B) and T. Rowe Price (down $2.1B). The largest declines over 3 months included: American Funds (down $8.4B), T. Rowe Price (down $6.5B), DWS (down $6.2B) and Invesco (down $4.6B).
Our latest domestic U.S. Money Fund Family Rankings show that Fidelity Investments remains the largest money fund manager with $1.618 trillion, or 21.0% of all assets. Fidelity was up $25.5B in September, up $73.8B over 3 mos., and up $207.9B over 12 months. JPMorgan ranked second with $827.8 billion, or 10.7% market share (up $12.1B, up $51.3B and up $136.8B for the past 1-month, 3-mos. and 12-mos., respectively). Vanguard ranked in third place with $711.3 billion, or 9.2% of assets (up $5.3B, up $15.0B and up $91.1B). Schwab ranked fourth with $666.6 billion, or 8.6% market share (up $1.9B, up $13.2B and up $104.5B), while BlackRock was the fifth largest MMF manager with $665.6 billion, or 8.6% of assets (up $1.7B, up $25.8B and up $88.0B for the past 1-month, 3-mos. and 12-mos.).
Federated Hermes was in sixth place with $505.6 billion, or 6.6% (up $3.6B, up $23.3B and up $51.4B), while Goldman Sachs was in seventh place with $424.3 billion, or 5.5% of assets (up $12.3B, up $8.4B and up $15.8B). BNY Dreyfus ($325.6B, or 4.2%) was in eighth place (up $12.4B, up $28.5B and up $42.9B), followed by Morgan Stanley ($277.9B, or 3.6%; down $1.8B, up $3.3B and up $29.5B). SSIM was in 10th place ($264.1B, or 3.4%; up $28.7B, up $23.2B and up $4.3B).
The 11th through 20th-largest U.S. money fund managers (in order) include: Allspring ($230.8B, or 3.0%), Northern ($189.2B, or 2.5%), First American ($178.4B, or 2.3%), American Funds ($159.7B, or 2.1%), Invesco ($155.9B, or 2.0%), UBS ($120.0B, or 1.6%), HSBC ($49.3B, or 0.6%), T Rowe Price ($48.1B, or 0.6%), Western ($40.4B, or 0.5%) and DWS ($38.3B, or 0.5%). Crane Data currently tracks 60 U.S. MMF managers, down 1 from last month.
When European and "offshore" money fund assets -- those domiciled in places like Ireland, Luxembourg and the Cayman Islands -- are included, the top 10 managers are the same as the domestic list, except: BlackRock moves up to the No. 3 spot, Vanguard moves down to No. 4 and Schwab moves down to the No. 5 spot. Goldman Sachs moves up to the No. 6 spot, while Federated Hermes moves down to the No. 7 spot and Morgan Stanley moves up to the No. 8 spot, while Dreyfus moves down to the No. 9 spot. Global Money Fund Manager Rankings include the combined market share assets of our MFI XLS (domestic U.S.) and our MFI International ("offshore") products.
The largest Global money market fund families include: Fidelity ($1.641 trillion), JP Morgan ($1.115 trillion), BlackRock ($1.008 trillion), Vanguard ($711.3B) and Schwab ($666.6B). Goldman Sachs ($584.7B) was in sixth, Federated Hermes ($519.6B) was seventh, followed by Morgan Stanley ($386.2B), Dreyfus/BNY ($386.1B) and SSIM ($315.0B), which round out the top 10. These totals include "offshore" U.S. Dollar money funds, as well as Euro and Pound Sterling (GBP) funds converted into U.S. dollar totals.
The October issue of our Money Fund Intelligence and MFI XLS, with data as of 9/30/25, shows that yields were down in September across all the Crane Money Fund Indexes. The Crane Money Fund Average, which includes all taxable funds covered by Crane Data (currently 720), was 3.84% (down 15 bps) for the 7-Day Yield (annualized, net) Average, the 30-Day Yield was down 8 bps to 3.92%. The MFA's Gross 7-Day Yield was at 4.21% (down 15 bps), and the Gross 30-Day Yield was down 8 bps at 4.29%. (Gross yields will be revised once we download the SEC's Form N-MFP data for 9/30/25 on Wednesday.)
Our Crane 100 Money Fund Index shows an average 7-Day (Net) Yield of 3.95% (down 16 bps) and an average 30-Day Yield at 4.03% (down 8 bps). The Crane 100 shows a Gross 7-Day Yield of 4.21% (down 16 bps), and a Gross 30-Day Yield of 4.29% (down 8 bps). Our Prime Institutional MF Index (7-day) yielded 4.05% (down 19 bps) as of September 30. The Crane Govt Inst Index was at 3.95% (down 16 bps) and the Treasury Inst Index was at 3.90% (down 15 bps). Thus, the spread between Prime funds and Treasury funds is 15 basis points, and the spread between Prime funds and Govt funds is 10 basis points. The Crane Prime Retail Index yielded 3.83% (down 16 bps), while the Govt Retail Index was 3.69% (down 14 bps), the Treasury Retail Index was 3.66% (down 14 bps from the month prior). The Crane Tax Exempt MF Index yielded 2.59% (up 7 bps) at the end of September.
Gross 7-Day Yields for these indexes to end September were: Prime Inst 4.28% (down 19 bps), Govt Inst 4.19% (down 16 bps), Treasury Inst 4.17% (down 15 bps), Prime Retail 4.31% (down 16 bps), Govt Retail 4.23% (down 14 bps) and Treasury Retail 4.18% (down 14 bps). The Crane Tax Exempt Index rose to 2.99% (up 7 bps). The Crane 100 MF Index returned on average 0.33% over 1-month, 1.03% over 3-months, 3.09% YTD, 4.31% over the past 1-year, 4.64% over 3-years annualized), 2.88% over 5-years, and 1.93% over 10-years.
The total number of funds, including taxable and tax-exempt, was down 3 in September at 832. There are currently 720 taxable funds, down 2 from the previous month, and 112 tax-exempt money funds (down 1 from last month). (Contact us if you'd like to see our latest MFI XLS, Crane Indexes or Market Share report.)
The October issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Tuesday morning, features the articles: "Wall of Cash, Levels of Cash Debate Heats Up; Still Going," which reviews the latest discussions around record MMF balances and potential outflows; "European MF Symposium Toasts Irish MMFs at $1T," which highlights our recent offshore money fund event in Dublin; and "Worldwide MMFs Jump in Q2'25 to Record $12.3 Trillion," which covers global MMF trends. We also sent out our MFI XLS spreadsheet Tuesday a.m., and we've updated our Money Fund Wisdom database with 9/30/25 data. Our October Money Fund Portfolio Holdings are scheduled to ship on Thursday, Oct. 9, and our October Bond Fund Intelligence is scheduled to go out on Wednesday, Oct. 15 (a day late due to the Columbus Day Holiday).
MFI's "Wall of Cash" story says, "With the first Fed rate cut in a year, the discussions over money moving out of money market funds and the 'wall of cash' moving into the stock market have heated up. Money fund assets, though, continue surging to record highs, pouring cold water on the theory. We review the latest discussions on this theory below."
It continues, "The Wall Street Journal recently wrote, '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.'"
We write in our "European MF Symposium" profile, "Crane Data recently hosted its 11th annual European Money Fund Symposium in Dublin, Ireland, which featured near-record attendance (195) and two days of discussions on offshore money funds denominated in USD, EUR and GBP. The event also celebrated money fund assets domiciled in Ireland breaking the $1 trillion level earlier this year (see our Worldwide story)."
It adds, "The keynote, 'Irish Funds Update: MMFs in Ireland & the EU,' featured Irish Funds' Conor Kilroy and Ruth Fairclough, and Northern Trust's Rachel Thornton. Kilroy explains, 'We were founded in 1991, so about four years before the establishment of the Irish Financial Services Centre (IFSC) ... a government initiative that was used to attract financial services to Ireland. Our mission is simple, to be the voice of the funds and asset management industry in Ireland, and our vision is to ensure that Ireland remains the premier location to enable and support global investing to its reputation for trust, capability and innovation. In terms of membership, we’re just over 150 members.'"
Our "Worldwide MMFs Jump" article says, "The Investment Company Institute's 'Worldwide Regulated Open-Fund Assets and Flows, Second Quarter 2025' shows that money fund assets globally rose by $470.2 billion, or 4.0%, in Q2'25 to a record $12.315 trillion. (The totals would have been $12.587 trillion if Australia and New Zealand had been included.) Increases were led by a sharp jump in money funds in China and Ireland, the latter which broke over $1 trillion for the first time ever."
It continues, "France and the U.S. also rose. Meanwhile, money funds in Argentina were lower. MMF assets worldwide increased by $1.672 trillion, or 15.7%, in the 12 months through 6/30/25, and money funds in the U.S. now represent 57.0% of worldwide assets."
MFI also includes the News brief, "Fed Cuts Rates to 4.0–4.25%." It says, "The Federal Reserve's FOMC cut interest rates by a quarter percent to a range of 4.0–4.25% on Sept. 17, and money market fund yields have declined from 4.10% to 3.95% in the three weeks since."
Another News brief, "Assets Hit a Record $7.75/$7.37T," writes, "ICI's weekly 'Money Market Fund Assets' report shows money fund assets surging higher by $50.5 billion to a record $7.365 trillion. MMF assets are up by $902 billion, or 14.0%, over the past 52 weeks (through 10/1/25), with Institutional MMFs up $522 billion, or 13.5% and Retail MMFs up $400 billion, or 15.4%. Crane Data's totals show MMFs hitting a record $7.76 trillion on 10/2."
A third News brief, "NY Fed Blog Says Money Funds Dominate Tokenization To Date; Stability?" says, "The Federal Reserve Bank of New York posted two briefs on tokenization on its 'Liberty Street Economics' blog. The first, 'The Emergence of Tokenized Investment Funds and Their Use Cases,' tells us, '[T]he bulk of tokenization activity in the United States has concentrated on two types of funds: money market funds (MMFs), which are open-end funds registered under the Investment Company Act of 1940... and private funds that are exempt from registration under that Act.'"
A sidebar, "Barron's: Cuts Will Hurt More," says, "Barron's writes, 'Cash Yields Are Going Down. Here's Where to Move Your Money.' The article comments, 'The Federal Reserve's expected interest-rate cuts are a double-edged sword for consumers: bad for savers, good for borrowers.... Do you have a lot of money parked in money-market funds? Are you looking to buy a house, refinance your mortgage, or whittle down credit card debt?'"
Our October MFI XLS, with September 30 data, shows total assets rose $100.4 billion to a record high $7.715 trillion, after increasing $129.9 billion in August, $69.0 billion in July, $10.1 billion in June and jumping $90.3 billion in May. MMFs decreased $26.6 billion in April and $4.6 billion in March. Assets increased $90.4 billion in February, $47.9 billion in January and $113.0 billion in December. Assets jumped $196.1 billion in November and $89.9 billion last October.
Our broad Crane Money Fund Average 7-Day Yield was down 15 bps at 3.84%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 15 bps at 3.95% in September. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 4.21% and 4.21%. Charged Expenses averaged 0.37% and 0.26% for the Crane MFA and the Crane 100. (We'll revise expenses once we upload the SEC's Form N-MFP data for 9/30/25 on Wednesday, 10/8.) The average WAM (weighted average maturity) for the Crane MFA was 41 days (unchanged) and the Crane 100 WAM was down 1 day from the previous month at 41 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
Capital Advisors Group published the update, "Worried About Declining Yields?" Subtitled, "Laddered SMA Portfolios vs. MMFs and Deposits in a Rate-Cutting Environment," the piece states, "The Federal Reserve recently cut overnight interest rates at its September meeting -- now what? As an institutional cash investor, you might feel like a kid watching the ice cream truck pulling away. But there may be a way to help keep yields from melting away: a separately managed account (SMA) built on fixed-income securities and laddered maturities. Compared to the old standbys of money market funds (MMFs) and bank deposits, a laddered SMA may help preserve income for a period of time by locking in current yields and thereby reducing the whiplash from policy moves. Our goal in publishing this report is to highlight how institutional cash management strategies that include fixed-income laddering may be beneficial when seeking higher yield and stability after Fed rate cuts."
It explains, "Over the past few years, an inverted yield curve -- where short-term rates outpace long-term rates -- tempted some institutional investors to park cash in MMFs or bank money market deposit accounts (MMDAs). While these instruments may be attractive due to their convenience, daily liquidity, and principal protection due to underlying government securities or FDIC deposit guarantees up to $250,000, they typically offer yields more closely tied to the federal funds rate (FFR), often surpassing individual securities like commercial paper (CP) or corporate bonds with maturities beyond overnight."
CAG's Lance Pan writes, "MMF and MMDA yields tend to dance to the Fed's tune, set by the FOMC to balance inflation and employment goals. But longer-maturity fixed income securities? They may be less beholden to these whims and may be more influenced by market expectations and economic data. After the 2024 rate cuts and subsequent pause at 4.25%-4.50%, some managers extended maturities to shield against future declines, while others preferred the status quo."
He states, "But there's a catch: MMFs and bank deposits are tethered to the federal funds rate. Typically, when the Fed cuts the FFR, other short rates quickly reset. In contrast, longer-maturity securities tend to reset more slowly -- their coupons remain fixed until maturity. This difference is where a laddered SMA strategy may offer advantages."
A section titled, "Why an SMA May Be Beneficial Now: Five Key Reasons" says, "Despite the lengthier set up process associated with SMAs, which typically involves adopting an investment policy and engaging an account manager, they may provide the following potential benefits compared to MMFs and deposits: (1.) Lock it in while you can. MMF and deposit yields typically decline as soon as the FFR moves lower. Purchasing high-quality bonds and notes today may help to lock in those coupons for their full term, supporting the preservation of a portfolio's yield potential for longer. (2.) Deposits generally pay less than market rates. Bank deposit yields are generally based on balance-sheet needs and loan demand, not strictly off of market yields. Historically, deposit rates tend to lag on the way up but can adjust downward quickly when cuts begin."
Other reasons include: "(3.) MMF reforms cap yield potential. Recent SEC reforms increased daily and weekly liquidity requirements, shortened portfolio weighted average maturities (WAMs), and introduced liquidity fees for institutional prime/tax-exempt funds.... (4.) Budget stability matters. Even in a comparable yield situation over an investment horizon, a laddered portfolio may offer steadier and more predictable income potential than MMFs or deposits, which tend to drop in step with each Fed cut -- an advantage for budgetary spending. (5.) If cuts accelerate, SMAs have the potential to shine. In a faster-easing scenario, MMF and deposit yields may drop quickly. A prudently laddered SMA may help preserve higher coupons over the next 12–24 months while maintaining staggered liquidity."
On the "Potential Advantages of SMAs Over 'Pooled' Short Vehicles," CAG cites, "Customization: MMFs are managed to satisfy the investment objectives of a broad shareholder base and tight regulatory liquidity/tenor constraints which may provide investors with daily liquidity. SMAs, however, may offer investors more control over the duration, sectors, and liquidity of their portfolios to reflect their business profile, risk tolerance and cash-flow needs. Transparency: An SMA's safety profile maturity, and individual credit exposures are typically more visible to the investor, which may be important to a firm's auditors and boards. MMF portfolio disclosures may be less frequent with fewer details. Yield and stability: Longer WAMs and credit exposures than MMFs may result in higher and potentially steadier income in a declining rate cycle."
Finally, Pan tells readers, "In a falling-rate cycle, it may not be prudent to let cash sit in MMFs or deposits while yields compress. A laddered SMA may allow cash investors to lock in more of today's yield, help produce a more stable future earnings stream, and maintain appropriate liquidity without playing the 'what-did-the-Fed-do-today' game every six weeks. It may be wise to consider reallocating a portion of liquid balances from MMFs and deposits into a laddered SMA of high-quality fixed income securities spread across the yield curve. Investors may want to consider maintaining an average maturity of one year or longer, while shortening WAM as the Fed approaches the 'terminal' target rate."
Capital Advisors Group also recently published, "Stablecoins: The Next Wave in Corporate Cash -- Hype, Help, or Hold Off?" It says, "As a cash investment strategist for institutional liquidity accounts, I would like to discuss stablecoins -- a promising yet emerging digital asset class that blends innovation with familiarity. Think of them as the intriguing newcomer in the world of liquidity portfolios: full of potential, but maybe not quite ready for the spotlight. The key takeaway? Stay open to financial technologies like on-chain assets and tokenization, which may help address longstanding challenges around efficiency and yield. For now, though, stablecoins are best viewed as a developing opportunity -- valuable to watch, but not quite ready for core institutional strategies."
This article continues, "Unless you've been living under a rock, you've probably heard about the GENIUS Act, enacted by Congress on July 18, 2025, creating the first comprehensive U.S. federal framework for payment stablecoins. Is this proof that stablecoins are going mainstream as reserve assets for institutional cash management? You've also likely been bombarded by headlines on tokenized money market funds, stablecoin reserve funds, and even tokenized commercial paper. Asset managers, custodian banks, and fintechs are envisioning digital 'wrappers' for plain-vanilla securities like Treasuries, commercial paper, and repurchase agreements, signaling a potential shift in how institutional liquidity and cash investments are managed."
It says, "Even Treasury Secretary Scott Bessent has publicly championed stablecoins, predicting that dollar-linked stablecoins could contribute $2 trillion or more in demand for U.S. Treasuries over the next few years. But is this stablecoin hype all smoke and no fire? Should corporate cash investors dive in and load their institutional liquidity pools with stablecoins, or stay far away from the 'crazy talk' and stick with the good ol' deposits, T-bills, and money market funds? Or is the more strategic move to land somewhere in between, balancing digital assets with traditional cash management strategies?"
The piece then states, "Stablecoins can be viewed as the reliable anchors of the cryptocurrency realm: digital tokens designed to maintain a stable value, typically pegged 1:1 to the U.S. dollar. Unlike volatile cryptocurrencies such as Bitcoin, stablecoins act as digital cash, facilitating swift payments, transfers, and value storage without dramatic price fluctuations. Operating on blockchain networks, they facilitate seamless, around-the-clock cross-border transactions, and are backed by reserves like U.S. Treasury bills or cash equivalents, potentially making them a practical tool for both institutional cash management and digital finance innovation."
It continues, "As of Sept. 3, 2025, CoinMarketCap reports that the market leader in stablecoins is Tether (USDT), with over $168 billion in circulation, primarily backed by U.S. Treasuries. The runner-up is Circle's USDC ($72 billion), which prioritizes regulatory compliance and transparency. Ethena's USDe and Dai's DAI occupy third and fourth places, with $12 billion and $5 billion, respectively. Additionally, PayPal's PYUSD coin integrates directly with everyday payment systems. Recent earnings reports from Circle highlight growing adoption, with reserves often allocated to money market funds like BlackRock's Circle Reserve Fund (USDXX), demonstrating stablecoins' shift from crypto periphery to corporate considerations."
Talking about "Stablecoins vs. Traditional Cash" they write, "Compared with traditional cash instruments such as bank deposits, money market funds (MMFs), Treasury bills, commercial paper (CP), and repurchase agreements (repos), stablecoins offer several compelling benefits. They deliver faster settlements, reduced fees for international transfers, and constant accessibility, unbound by banking hours. Additionally, integration with decentralized finance (DeFi) platforms can provide cost efficiencies and higher returns than conventional low-interest deposits. However, new technologies also introduce unique drawbacks, which warrant caution."
The Investment Company Institute's latest weekly "Money Market Fund Assets" report shows money fund assets surging higher by $50.5 billion to a record $7.365 trillion. MMFs rose $31.2 billion the prior week, after falling $19.5 billion two weeks prior. MMF assets are up by $902 billion, or 14.0%, over the past 52 weeks (through 10/1/25), with Institutional MMFs up $522 billion, or 13.5% and Retail MMFs up $400 billion, or 15.4%. Year-to-date, MMF assets are up by $515 billion, or 7.5%, with Institutional MMFs up $273 billion, or 6.6% and Retail MMFs up $262 billion, or 9.6%.
ICI's weekly release says, "Total money market fund assets increased by $50.55 billion to $7.37 trillion for the week ended Wednesday, October 1, the Investment Company Institute reported.... Among taxable money market funds, government funds increased by $54.64 billion and prime funds decreased by $6.58 billion. Tax-exempt money market funds increased by $2.49 billion." ICI's stats show Institutional MMFs increasing $33.3 billion and Retail MMFs increasing $17.2 billion in the latest week. Total Government MMF assets, including Treasury funds, were $6.018 trillion (81.7% of all money funds), while Total Prime MMFs were $1.208 trillion (16.4%). Tax Exempt MMFs totaled $139.4 billion (1.9%).
It explains, "Assets of retail money market funds increased by $17.22 billion to $2.98 trillion. Among retail funds, government money market fund assets increased by $12.82 billion to $1.87 trillion, prime money market fund assets increased by $2.83 billion to $978.23 billion, and tax-exempt fund assets increased by $1.58 billion to $125.82 billion." Retail assets account for 40.7% of the total, and Government Retail assets make up 62.9% of all Retail MMFs.
They add, "Assets of institutional money market funds increased by $33.32 billion to $4.39 trillion. Among institutional funds, government money market fund assets increased by $41.82 billion to $4.14 trillion, prime money market fund assets decreased by $9.41 billion to $229.73 billion, and tax-exempt fund assets increased by $912 million to $13.53 billion." Institutional assets accounted for 59.6% of all MMF assets, with Government Institutional assets making up 94.5% of all institutional MMF totals.
According to Crane Data's separate Money Fund Intelligence Daily series, money fund assets increased by $37.9 billion the first day in October to a record $7.746 trillion. Assets broke above $7.7 trillion for the first time on September 23 and have surged higher since (with a brief pause on Sept. 30). Assets increased by $105.2 billion in September, $132.0 billion in August, $63.7 billion in July, $6.7 billion in June and $100.9 billion in May. They fell by $24.4 billion in April, but rose $2.8 trillion in March, $94.2 billion in February and $52.8 billion in January. They jumped $110.9 billion in December, $200.5 billion in November, and $97.5 billion last October. Note that ICI's asset totals don't include a number of funds tracked by the SEC and Crane Data, so they're almost $400 billion lower than Crane's asset series.
In other news, a press release titled, "AlloyX Launches Tokenized Money Market Fund, Real Yield Token (RYT), on Polygon," tells us, "AlloyX, Asia's leading stablecoin service provider, has launched a compliant tokenized money market fund, Real Yield Token (RYT), exclusively on Polygon. RYT acts as a bridge between regulated liquidity and programmable finance. Users can tap into institutional-grade yield while unlocking the frictionless efficiency of DeFi. Yield generation and risk oversight finally move in sync."
It explains, "The launch adds momentum to Polygon's role as the preferred chain for global payments and tokenization. Long-term stability, low cost, and near-instant finality make Polygon stand out as financial markets pivot toward onchain settlement. RYT is designed for capital efficiency and extracting maximum yield. By looping -- supplying tokens as collateral, borrowing against them, and repeating -- users can amplify liquidity and returns while staying inside regulatory guardrails. On Polygon, those loops run with minimal fees and high throughput, maximizing both yield and onchain activity."
The statement says, "Hong Kong-based Standard Chartered Bank provides custody and acts as registrar. The fund operates on daily cycles with T+1 settlement, and selected data is published onchain for transparency. Institutional investors get the compliance and auditability they know and expect, paired with DeFi's speed and composability."
It adds, "AlloyX joins a growing roster of institutions and governments building financial applications and payment platforms on Polygon, including Stripe, Franklin Templeton, Apollo, BlackRock, and others reshaping markets through tokenization."
Reuters writes, "EU risk watchdog calls for urgent safeguards on stablecoins," which states, "The European Union's financial risk watchdog called on Thursday for urgent safeguards on stablecoins only partly issued in the bloc, echoing a warning from the European Central Bank, which is worried that their failure could induce a run on reserves. Stablecoins are a type of cryptocurrency designed to hold a steady value by being pegged to a reserve asset such as a currency or basket of assets."
The article explains, "The EU has put in place one of the world's strictest regimes on crypto assets but policymakers worry that issuers originating from outside the bloc enjoy easier regulation and could import financial risk. 'The General Board stressed that third country multi-issuer schemes -- with fungible stablecoins issued both in the EU and outside -- have built-in vulnerabilities which require an urgent policy response,' the European Systemic Risk Board, headed by ECB President Christine Lagarde, said in a statement."
It adds, "EU rules require stablecoins to be fully backed by reserves. Lagarde said the bloc should hold companies that issue stablecoins both in the EU and abroad to the same standards. In 'multi-issuer' schemes, an EU and a non-EU entity jointly issue stablecoins, and the strict EU regulation does not extend to the non-EU issuer, tilting the playing field."
The NY Fed's Liberty Street Economics blog published a piece titled, "A Historical Perspective on Stablecoins." It states, "Digital currencies have grown rapidly in recent years. In July 2025, Congress passed the 'Guiding and Establishing National Innovation for U.S. Stablecoins Act' (GENIUS) Act, establishing the first comprehensive federal framework governing the issuance of stablecoins. In this post, we place stablecoins in a historical perspective by comparing them to national bank notes, a form of privately issued money that circulated in the United States from 1863 through 1935."
A section titled, "What Are Stablecoins?" says, "Stablecoins are digital currencies designed to maintain a stable nominal value by being pegged to a benchmark such as the U.S. dollar. Stablecoins aim to combine decentralized payment systems' technological advantages -- such as digital methods of recording transactions (i.e., digital ledgers/blockchains) and of representing traditional assets (e.g., tokenization) -- with the convenience of traditional forms of money."
It continues, "The GENIUS Act gives fiat-backed stablecoins a clear legal foundation in the United States. Under the Act, permitted payment stablecoin issuers (PPSIs), such as federally regulated banks, approved nonbanks, or qualifying state-chartered entities, are authorized to issue stablecoins. Stablecoins under the Act must be fully backed one-to-one by safe, liquid assets such as U.S. dollars, short-term Treasury securities, uninsured deposits at commercial banks, or cash equivalents. Issuers may not pay interest or yields on stablecoin balances, and holders enjoy priority claims in bankruptcy. To promote transparency, issuers must provide monthly public disclosures of their reserves."
The blog comments, "Stablecoins may feel novel but, conceptually, they echo an earlier era of U.S. financial history. From 1863 to 1935, 'national bank notes' circulated widely as a form of private money that was backed by public debt. Authorized by the National Banking Acts of 1863 and 1864, these notes were issued by national banks, which were commercial banks chartered under federal law."
It asks, "How did note issuance by national banks work? A bank could apply for a national bank charter by the Office of the Comptroller of the Currency if it fulfilled a set of requirements such as having a minimum amount of capital. Once the bank was granted a national bank charter, it could use its capital to purchase government bonds. To print notes, the bank then had to deposit with the Treasury U.S. government bonds that were eligible for note issuance. National bank notes were redeemable in lawful money such as specie (coin) or greenbacks (paper money issued by the Treasury directly)."
The blog then says, "The original motive of the National Banking Acts was twofold. First, the issuance of national bank notes was intended to create a uniform currency. Before the National Banking Era (1863-1913), during the so-called Free Banking Era (1837-1863), banks were typically legally required to back any note issuance with bonds of the state governments.... Providing a currency for circulation through the newly formed national banking system was an attempt to create a uniform currency in which bank notes had the same value in all parts of the country."
It adds, "Second, directly connecting the issuance of national bank notes to federal government bonds was a means to increase demand for the bonds. The federal government saw a large rise in its expenses during the Civil War, and, to finance those expenses, it desired to issue government bonds. Thus, it was expedient to create a currency based on its own debt."
A section titled, "What Can History Teach Us About the Potential Success of Stablecoins?" says, "These historical details show that national bank notes and stablecoins have many commonalities. Similar to national bank notes, stablecoins under the GENIUS Act are privately issued but can be partially or fully backed by government securities. Moreover, they are issued by many private entities that are granted a charter to earn seigniorage from holding government bonds. Like national banks, issuers of stablecoins can also engage in other lines of business. Finally, stablecoins, like national bank notes, promise to be redeemable at par and the one-to-one convertibility with government money is supposed to be maintained even when the issuer fails and defaults on other liabilities that are not stablecoins."
The piece tells us, "National bank notes were initially successful for two main reasons. First, given that they were traded at the same price as greenbacks and specie, they were a more useful form of money than other circulating notes. Second, bank notes faced little competition from other forms of money, such as bank deposits. Before the rise of deposit insurance, deposits were often risky investments and, historically, not a widely accepted form of payment."
It says, "However, as the interbank system in the U.S. developed, the use of deposits for payments became increasingly common. While national bank notes represented around 20 percent of total bank assets by the end of 1880, that share declined thereafter.... The decline in bank notes was mirrored by the increase in deposits. This pattern is in line with a decline in the demand for bank notes and the rise of bank deposits as an alternative source of money."
The update adds, "Bank deposits had an advantage over national bank notes in that they were able to earn interest. And while deposits remained risky investments, they became increasingly attractive as payment systems improved. Eventually, most households and firms that desired to hold money for transaction purposes held deposits rather than national bank notes, and they either used checks or wired money from bank to bank to make payments, rather than carrying notes."
It comments, "This dynamic between national bank notes and bank deposits is a cautionary tale for the potential rise of stablecoins. Currently, most retail deposits pay little interest. Moreover, banks charge considerable fees for large instant payments such as wire fees. However, as stablecoins become more commonly used, the traditional centralized payment system may move to become more attractive in response. To avoid losing valuable deposits, banks may start to offer better terms on deposits or offer both higher interest and better payment services, just as they did during the National Banking Era. Alternatively, bank deposits may become 'tokenized' themselves."
They also tell us, "Thus, at least for domestic payments, the footprint of stablecoins may be limited given that many potential retail depositors may stick with bank deposits. For international payments, because the scope for improvements in the efficiency of the international payment system is itself more limited, demand for stablecoins may be highest from international investors that either require seamless cross-border payments, otherwise have no access to reliable forms of money, or prefer decentralized payment systems for other reasons."
The blog concludes, "Stablecoins under the GENIUS Act share important features with national bank notes: both are forms of private money backed by federal government debt. The historical experience of national bank notes illustrates that stablecoins may have a large potential to increase the demand for U.S. government debt. However, at the same time, the demise of national bank notes and the rise of bank deposits also suggest that other forms of money may become more attractive as a consequence of the new competition. While this would arguably be a desirable effect of the GENIUS Act, it may also induce a natural upper limit for the growth of the market for stablecoins themselves."
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 26) includes Holdings information from 55 money funds (down 19 from a week ago), or $3.709 trillion (down from $4.310 trillion) of the $7.730 trillion in total money fund assets (or 48.0%) 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 $1.870 trillion (down from $2.082 trillion a week ago), or 50.4%; Repurchase Agreements (Repo) totaling $1.227 trillion (down from $1.468 trillion a week ago), or 33.1%, and Government Agency securities totaling $296.4 billion (down from $376.6 billion a week ago), or 8.0%. Commercial Paper (CP) totaled $150.7 billion (down from $178.5 billion a week ago), or 4.1%. Certificates of Deposit (CDs) totaled $74.4 billion (down from $91.1 billion a week ago), or 2.0%. The Other category accounted for $54.4 billion or 1.5%, while VRDNs accounted for $36.3 billion or 1.0%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.870 trillion (50.4% of total holdings), Fixed Income Clearing Corp with $431.7B (11.6%), the Federal Home Loan Bank with $194.8B (5.3%), JP Morgan with $117.9B (3.2%), BNP Paribas with $88.7B (2.4%), RBC with $84.4B (2.3%), Citi with $73.4B (2.0%), Federal Farm Credit Bank with $70.6B (1.9%), Wells Fargo with $67.2B (1.8%) and Barclays PLC with $55.6B (1.5%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($303.6B), Fidelity Inv MM: Govt Port ($284.1B), JPMorgan 100% US Treas MMkt ($266.3B), Goldman Sachs FS Govt ($234.7B), BlackRock Lq FedFund ($176.8B), State Street Inst US Govt ($170.0B), BlackRock Lq Treas Tr ($167.9B), Fidelity Inv MM: MM Port ($165.0B), Morgan Stanley Inst Liq Govt ($159.9B) and Dreyfus Govt Cash Mgmt ($155.6B). (Let us know if you'd like to see our latest domestic U.S. and/or "offshore" Weekly Portfolio Holdings collection and summary.)
In other news, the Federal Reserve Bank of New York posted two briefs on the topic of the 2023 Bank Run on its "Liberty Street Economics" blog. The first, "Reading the Panic: How Investors Perceived Bank Risk During the 2023 Bank Run," tells us, "The bank run that started in March 2023 in the U.S. occurred at an unusually rapid pace, suggesting that depositors were surprised by these events. Given that public data revealed bank vulnerabilities as early as 2022:Q1, were other market participants also surprised? In this post, based on a recent paper, we develop a new, high-frequency measure of bank balance sheet risk to examine how stock market investors' risk sensitivity evolved around the run. We find that stock market investors only became attentive to bank risk after the run and only to the risk of a limited number (less than one-third) of publicly traded banks. Surprisingly, investors seem to have mostly focused on media exposure and not fundamentals when evaluating bank risk. In a companion post, we examine how the Federal Reserve's liquidity support affected investor risk perceptions."
The first blog asks, "How Risky Were Banks Before the Bank Run?" It responds, "We emphasize two balance sheet features that turned out to be particularly problematic during the bank run: the share in total assets of uninsured deposits (denoted UID) and the share in total assets of unrealized losses on securities held in accounts not intended for trading (denoted Losses). High values of UID proved to be risky as they were concentrated in certain sectors, which heightened the risk of rapid withdrawals. When Losses are high (typically when interest rates are increasing, as in 2022) and ultimately realized, bank capital is more likely to be eroded below regulatory limits."
They tell us, "At the individual bank level, we find that the betas increased during the run for about a third of all publicly traded banks. Thus, investor concerns about bank risk were seemingly not broad-based. What characterized this limited set of banks? Surprisingly, we find that balance sheet variables as of 2022:Q3 or Q4 fail to predict which banks had significantly higher betas during the run. In other words, banks perceived as riskier by investors during the run were seemingly not the ones with worse fundamentals in 2022."
The piece adds, "If fundamentals did not drive investor attention, then what did? We consider whether news coverage facilitated the coordination of investor attention on certain banks. Such a possibility has previously been found in the context of bank failures. We define a bank's news coverage as the number of articles about a bank on a given day divided by the bank's assets, to account for larger banks having more publications.... When some distressed banks were put on a downgrade watch by Moody's after the markets closed on March 13, [publications] spiked for all distressed banks. Media interest surged again when the distressed banks were downgraded starting on April 14. In general, it appears that increases in [articles] are associated with risk events."
Finally, it says, "During the bank run of 2023, news flows were at least as important as underlying bank fundamentals in driving investor perceptions of bank risk. News coverage, even when stale, appeared to have served as a coordination device, helping investors focus collectively on certain banks. These results imply that investors may be unable to quickly process information in a crisis, potentially making market price dynamics noisier, to the detriment of market participants and policymakers. However, as investor attention was focused on a few banks rather than a broad swathe of the banking sector, the contagion was contained. Liquidity support by the Federal Reserve may also have limited contagion, a topic we examine in our companion post."
The second blog, "Calming the Panic: Investor Risk Perceptions and the Fed's Emergency Lending during the 2023 Bank Run," states, "In a companion post, we showed that during the bank run of spring 2023 investors were seemingly not concerned about bank risk broadly but rather became sensitized to the risk of only about a third of all publicly traded banks. In this post, we investigate how the Federal Reserve's liquidity support affected investor risk perceptions during the run. We find that the announcement of the Fed's novel Bank Term Funding Program (BTFP), and subsequent borrowings from the program, substantially reduced investor risk perceptions. However, borrowings from the Fed's traditional discount window (DW) had no such effect."
Discussing "The Fed's Liquidity Support Programs During the 2023 Bank Run," it says, " "The Federal Reserve deployed two main liquidity facilities during the bank run, with different designs. The BTFP, announced on March 12, 2023, allowed banks to borrow against the face value of securities eligible for purchase by the Federal Reserve Banks in open market operations (OMO) -- such as U.S. Treasuries, U.S. agency securities, and U.S. agency mortgage-backed securities -- with a maturity of up to one year. Banks that had suffered capital losses on these securities when rising rates reduced their prices could post them as collateral to the BTFP and obtain funding equal to their full face value. In contrast, the DW, a long-established liquidity facility, provided short-term funds against the market value of eligible securities, which is lower than the par value for underwater securities. However, the DW accepts a wider range of collateral (both liquid and illiquid) than the BTFP. During this period, neither facility applied a haircut to the borrowing amount."
The update explains, "We find that investor perception of risks from uninsured deposits and unrealized losses on securities (measured by the UID and Losses betas, respectively, as explained in our companion post) increased with OMO losses in the two weeks prior to the BTFP announcement but decreased with OMO losses in the two weeks following the announcement. For banks with high OMO losses, this decline was substantial. For example, for banks in the 90th percentile of OMO losses, the BTFP announcement almost fully offsets the increased risk perceptions in the two weeks prior to the announcement."
The second article adds, "The BTFP strongly reduced investor risk perceptions of banks that carried large amounts of unrealized losses on underwater liquid securities on their books. By credibly committing to lending against the face value of these securities, the Federal Reserve mitigated the market's concern about the banks being forced to realize losses on their securities portfolios. The announcement of this backstop was enough to calm investor nerves, even before banks used the facility. In contrast to the BTFP, the traditional DW facility did not affect investor concerns about bank risk, suggesting that liquidity programs targeting the specific causes of a crisis may be more effective."
It concludes, "Despite these beneficial effects, there are likely limits to BTFP-style interventions. Distressed banks benefited most from the BTFP, and similar results were found in prior research on the Federal Reserve's liquidity facilities during the global financial crisis of 2008. Thus, liquidity programs may slow down the resolution of distressed banks, thereby limiting market discipline. On the other hand, resolution of distressed banks during a crisis may have contagious effects even on safer banks, and so delaying such resolutions till the crisis is over may be prudent."
