Top MMFs Break 4.0% Yield; Sweeps Up

Nov 22 22

Money fund yields were higher yet again last week -- our Crane 100 Money Fund Index (7-Day Yield) rose 5 basis points to 3.54% in the week ended Friday, 11/18. Yields rose by 36 basis points the previous week and are up from 2.88% on Oct. 31 and 2.66% on Sept. 30. Yields should continue to inch higher as they digest the remainder of the Fed's Nov. 2nd 75 bps rate hike, and they should hit 4.0% by year end, if, as expected, the Fed hikes rates again on Dec. 14. The top-yielding money market funds are already touching 4.0% though (see our "`Highest-Yielding Money Funds" table above) <b:>`_. Our broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 677), shows a 7-day yield of 3.41%, up 6 bps in the week through Friday. Prime Inst MFs were up 6 bps to 3.69% in the latest week. Government Inst MFs rose by 3 bps to 3.40%. Treasury Inst MFs up 7 bps for the week at 3.40%. Treasury Retail MFs currently yield 3.20%, Government Retail MFs yield 3.19%, and Prime Retail MFs yield 3.54%, Tax-exempt MF 7-day yields were down at 1.65%. According to Monday's Money Fund Intelligence Daily, with data as of Friday (11/18), 133 funds (out of 816 total) still yield between 0.00% and 1.99% with assets of $111.2 billion, or 2.2% of total assets; 75 funds yielded between 2.00% and 2.99% with $98.2 billion, or 1.9%; 608 funds yield 3.00% or more ($4.846 trillion, or 95.9%), and 4 funds have now officially broken over the 4.0% yield barrier. Brokerage sweep rates saw a number of changes over the past week. Our Crane Brokerage Sweep Index, the average rate for brokerage sweep clients (almost all of which are swept into FDIC insured accounts; only Fidelity sweeps to a money market fund), was unchanged this past week at 0.40% following a 6 bps jump the previous week. The latest Brokerage Sweep Intelligence, with data as of Nov. 18, shows just one rate change over the previous week. Wells Fargo increased rates to 0.15% for all balances between $1 and $999K, to 0.50% for all balances between $1 million and $1.9 million and to 0.85% for all balances between $5 million and $9.9 million. Just 3 of 11 major brokerages still offer rates of 0.01% for balances of $100K (and lower tiers). These include: E*Trade, Merrill Lynch and Morgan Stanley.

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