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 May 12) includes Holdings information from 71 money funds (up 14 from two weeks ago), which totals $2.891 trillion (up from $2.495 trillion) of the $5.749 trillion in total money fund assets (or 50.3%) tracked by Crane Data. (Our Weekly MFPH are e-mail only and aren't available on the website. See our latest Monthly Money Fund Portfolio Holdings here.)

Our latest Weekly MFPH Composition summary again shows Government assets dominating the holdings list with Repurchase Agreements (Repo) totaling $1.706 trillion (up from $1.423 trillion two weeks ago), or 59.0%; Treasuries totaling $693.6 billion (up from $643.9 billion two weeks ago), or 24.0%, and Government Agency securities totaling $277.0 billion (up from $250.5 billion), or 9.6%. Commercial Paper (CP) totaled $70.1 billion (up from two weeks ago at $55.4 billion), or 2.4%. Certificates of Deposit (CDs) totaled $55.1 billion (up from $52.7 billion two weeks ago), or 1.9%. The Other category accounted for $62.3 billion or 2.2%, while VRDNs accounted for $27.1 billion, or 0.9%.

The Ten Largest Issuers in our Weekly Holdings product include: the Federal Reserve Bank of New York with $1.081 trillion (37.4%), the US Treasury with $693.2 billion (24.0% of total holdings), Federal Home Loan Bank with $222.2B (7.7%), Fixed Income Clearing Corp with $152.9B (5.3%), Federal Farm Credit Bank with $49.5B (1.7%), JP Morgan with $47.6B (1.6%), Citi with $44.6B (1.5%), BNP Paribas with $36.3B (1.3%), Barclays PLC with $35.5B (1.2%) and RBC with $31.3B (1.1%).

The Ten Largest Funds tracked in our latest Weekly include: Goldman Sachs FS Govt ($269.4B), JPMorgan US Govt MM ($243.3B), Fidelity Inv MM: Govt Port ($177.5B), Morgan Stanley Inst Liq Govt ($161.1B), JPMorgan 100% US Treas MMkt ($136.9B), BlackRock Lq FedFund ($133.3B), Dreyfus Govt Cash Mgmt ($119.5B), Goldman Sachs FS Treas Instruments ($113.1B), BlackRock Lq Treas Tr ($104.1B) and Fidelity Inv MM: MM Port ($98.9B). (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 Atlantic Council writes, "The US debt ceiling stalemate threatens money market funds -- and financial stability." They explain, "The current crisis among US regional banks has caused a huge outflow of bank deposits to money market funds (MMFs) offering higher interest rates. But MMFs are exposed to one of the greatest risks currently facing the global economy: the possibility that the US breaches its debt ceiling and defaults on its debt."

The piece continues, "Over the past year, bank deposits fell by almost $1 trillion while assets under management (AUM) of the MMFs increased by $700 billion. MMFs were growing before the banking turmoil, too: AUM has increased by $1.7 trillion since the beginning of 2020, to $5.7 trillion at present. Since MMFs largely invest in US Treasury bills [sic], their status as a safe and attractive alternative to bank deposits would be threatened if the national debt ceiling stalemate cannot be resolved in time. A debt ceiling breach would put in doubt the government's ability to meet its obligations, as soon as June 1."

It states, "This is known as the X-date when the Treasury Department will have exhausted all extraordinary measures to avoid breaching the $31.4 trillion debt ceiling. Even if the stalemate is resolved at the last moment, as market participants currently expect, the increase in the probability of government default would elevate uncertainty and further unsettle financial markets which have already been under stress. The tail-end risk of a messy and prolonged debt ceiling stalemate is higher this time around than previously -- and money markets will be the first to react if a deal isn't reached in time."

The Atlantic Council update claims, "MMFs are vulnerable to disruptions in the Treasury market since they hold a lot of Treasury bills. In particular, government MMFs -- with $4.4 trillion in AUM -- split their portfolios almost evenly between Treasury bills and lending to the Fed via the Overnight Reverse Repo facility [sic]. Under this facility, MMFs can lend money to the Fed on an overnight basis, taking US Treasury securities as collateral and agreeing to sell them back at predetermined rates. The Fed reserve repo facility has grown substantially in recent years, reaching $2.2 trillion in volume at present."

The speculate, "As the X-date approaches, one-year US sovereign Credit Default Swap (CDS) spreads (equivalent to the insurance premiums investors pay for protection against default) have jumped to more than 160 basis points—a record high compared to less than 20 basis points during normal times. That exceeds the CDS spreads for Mexico, Brazil and Greece. Investors have also avoided T-bills maturing right after the X-date, pushing up their yields. For example, at the latest auction on May 4, yields on one-month T-bills maturing on June 6 jumped to 5.76 percent, or 240 basis points higher than two weeks ago. Such a sharp and abrupt increase in yields has reduced the prices of fixed income instruments like T-bills, leading to mark-to-market losses at MMFs. Depending on their portfolio composition and risk management practices, some MMFs could suffer losses noticeable enough to discomfort their clients who expect stable values of these funds."

The article also says, "In short, possible mark-to-market losses and credit downgrades of Treasury securities, the main assets held by MMFs, would generate anxiety among MMF clients, probably prompting some to move their money elsewhere. (Much of it might flow to the top banks, further accelerating the consolidation of the US banking system.) While any outflow could be dampened to some extent by the gating arrangements and liquidity fees [sic] employed by MMFs to manage the outflow in an orderly way, this would nevertheless heighten uncertainty and a sense of nervousness in financial markets already struggling to cope with the regional banking crisis, high interest rates, and a credit crunch. Adding a run on MMFs to heighten market turmoil might trigger a more severe recession than hitherto expected. For that reason, the negative financial and economic impacts of the current debt ceiling stalemate could be more substantial than those of the previous episodes in 2011 and 2013."

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