News Archives: June, 2025
Crane Data's latest monthly Money Fund Market Share rankings show assets mostly higher among the largest U.S. money fund complexes in May after being lower in April. Assets increased in March, February, January, December, November, October, September, August, July, and June 2024. Money market fund assets rose by $90.4 billion, or 1.2%, last month to a record $7.407 trillion. Total MMF assets have increased by $77.6 billion, or 1.1%, over the past 3 months, and they've increased by $932.9 billion, or 14.4%, over the past 12 months. The largest increases among the 25 largest managers last month were seen by BlackRock, JPMorgan, Vanguard, First American and Federated Hermes, which grew assets by $16.1 billion, $15.8B, $14.5B, $9.6B and $9.1B, respectively. Declines in May were seen by Goldman Sachs, HSBC, AllianceBernstein, PGIM and Morgan Stanley, which decreased by $6.4 billion, $4.0B, $1.9B, $1.5B and $949M, 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 flat to slightly lower in May.
Over the past year through May 31, 2025, Fidelity (up $211.2B, or 16.1%), Schwab (up $118.1B, or 22.4%), JPMorgan (up $116.9B, or 17.7%), BlackRock (up $112.5B, or 21.5%) and Vanguard (up $95.9B, or 16.0%) were the `largest gainers. Vanguard, American Funds, Fidelity, BlackRock and Schwab had the largest asset increases over the past 3 months, rising by $35.8B, $29.2B, $24.9B, $22.9B and $20.4B, respectively. The largest declines over 12 months were seen by: RBC (down $3.7B), Columbia (down $2.5B), PGIM (down $2.1B) and AllianceBernstein (down $21M). The largest declines over 3 months included: Goldman Sachs (down $29.1B), Morgan Stanley (down $18.0B), SSGA (down $8.3B) and JPMorgan (down $8.2B).
Our latest domestic U.S. Money Fund Family Rankings show that Fidelity Investments remains the largest money fund manager with $1.525 trillion, or 20.6% of all assets. Fidelity was up $4.7B in May, up $24.9 billion over 3 mos., and up $211.2B over 12 months. JPMorgan ranked second with $777.8 billion, or 10.5% market share (up $15.8B, down $8.2B and up $116.9B for the past 1-month, 3-mos. and 12-mos., respectively). Vanguard ranked in third place with $694.9 billion, or 9.4% of assets (up $14.5B, up $35.8B and up $95.9B). Schwab ranked fourth with $645.4 billion, or 8.7% market share (up $7.9B, up $20.4B and up $118.1B), while BlackRock was the fifth largest MMF manager with $634.5 billion, or 8.6% of assets (up $16.1B, up $22.9B and up $112.5B for the past 1-month, 3-mos. and 12-mos.).
Federated Hermes was in sixth place with $480.7 billion, or 6.5% (up $9.1B, down $4.9B and up $29.6B), while Goldman Sachs was in seventh place with $426.0 billion, or 5.8% of assets (down $6.4B, down $29.1B and up $34.5B). Dreyfus ($292.0B, or 3.9%) was in eighth place (up $269M, down $2.1B and up $19.9B), followed by Morgan Stanley ($281.7B, or 3.8%; down $949M, down $18.0B and up $35.9B). SSGA was in 10th place ($246.9B, or 3.3%; up $4.5B, down 8.3B and up $33.8B).
The 11th through 20th-largest U.S. money fund managers (in order) include: Allspring ($212.1B, or 2.9%), Northern ($179.9B, or 2.4%), American Funds ($178.5B, or 2.4%), First American ($175.7B, or 2.4%), Invesco ($168.4B, or 2.3%), UBS ($115.8B, or 1.6%), T. Rowe Price ($54.9B, or 0.7%), DWS ($43.8B, or 0.6%), HSBC ($43.8B, or 0.6%) and Western ($33.7B, or 0.5%). Crane Data currently tracks 61 U.S. MMF managers, unchanged 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 ($1.546 trillion), JP Morgan ($1.055 trillion), BlackRock ($963.6B), Vanguard ($694.9B) and Schwab ($645.4B). Goldman Sachs ($581.7B) was in sixth, Federated Hermes ($493.0B) was seventh, followed by Morgan Stanley ($383.3B), Dreyfus/BNY ($317.3B) and SSGA ($299.1B), 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 June issue of our Money Fund Intelligence and MFI XLS, with data as of 5/31/25, shows that yields were lower in May across all the Crane Money Fund Indexes. The Crane Money Fund Average, which includes all taxable funds covered by Crane Data (currently 728), was 4.01% (down 1 bp) for the 7-Day Yield (annualized, net) Average, the 30-Day Yield was down 2 bps to 4.01%. The MFA's Gross 7-Day Yield was at 4.38% (down 1 bps), and the Gross 30-Day Yield was down 2 bps at 4.38%. (Gross yields will be revised once we download the SEC's Form N-MFP data for 5/31/25 on Monday.)
Our Crane 100 Money Fund Index shows an average 7-Day (Net) Yield of 4.11% (down 2 bps) and an average 30-Day Yield at 4.11% (down 2 bps). The Crane 100 shows a Gross 7-Day Yield of 4.38% (down 2 bps), and a Gross 30-Day Yield of 4.38% (down 2 bps). Our Prime Institutional MF Index (7-day) yielded 4.25% (down 2 bps) as of May 31. The Crane Govt Inst Index was at 4.11% (down 2 bps) and the Treasury Inst Index was at 4.07% (down 1 bp). Thus, the spread between Prime funds and Treasury funds is 18 basis points, and the spread between Prime funds and Govt funds is 14 basis points. The Crane Prime Retail Index yielded 3.98% (down 2 bps), while the Govt Retail Index was 3.82% (down 2 bps), the Treasury Retail Index was 3.83% (down 1 bp from the month prior). The Crane Tax Exempt MF Index yielded 2.12% (down 85 bps) at the end of May.
Gross 7-Day Yields for these indexes to end May were: Prime Inst 4.48% (down 1 bp), Govt Inst 4.37% (down 1 bp), Treasury Inst 4.35% (down 1 bp), Prime Retail 4.47% (down 2 bps), Govt Retail 4.37% (down 1 bp) and Treasury Retail 4.35% (down 1 bp). The Crane Tax Exempt Index fell to 2.52% (down 85 bps). The Crane 100 MF Index returned on average 0.35% over 1-month, 1.04% over 3-months, 1.64% YTD, 4.66% over the past 1-year, 4.34% over 3-years annualized), 2.60% over 5-years, and 1.79% over 10-years.
The total number of funds, including taxable and tax-exempt, was unchanged in May at 841. There are currently 728 taxable funds, unchanged from the previous month, and 113 tax-exempt money funds (unchanged from last month). (Contact us if you'd like to see our latest MFI XLS, Crane Indexes or Market Share report.)
The June issue of our flagship Money Fund Intelligence newsletter, which was sent to subscribers Friday morning, features the articles: "Shift from Treasuries to Repo Continues; FICC Repo Hits $1T," which discusses recent portfolio composition shifts in the MMF space; "Fed, EU Focus on Treasuries, Money Markets, NBFIs," which looks at bank regulators renewed interest in MMFs and non-banks; and, "Fitch: Liquidity LGIPs Rise to Over $430B; S&P Q1 Update" which reviews recent news on local government investment pools. We also sent out our MFI XLS spreadsheet Friday a.m., and we've updated our Money Fund Wisdom database with 5/31/25 data. Our June Money Fund Portfolio Holdings are scheduled to ship on Tuesday, June 10, and our June Bond Fund Intelligence is scheduled to go out on Friday, June 13. (Note: Register ASAP for our upcoming Crane's Money Fund Symposium, which is in just over 2 weeks -- June 23-25 -- in Boston!)
MFI's "Shift from Treasuries" article says, "The U.S. Treasury's Office of Financial Research (OFR) published a blog piece titled, 'OFR's MMF Monitor Shows Reduced Federal Reserve ON RRP Use.' It states, 'In Q1 2025, U.S. money market funds (MMFs) experienced strong cash inflows from retail and institutional investors that pushed assets to $7.4 trillion by quarter-end, according to OFR's U.S. Money Market Fund Monitor data. Investors sought relative safety from broader market volatility and benefited from the yield advantage generally offered by MMFs over alternative investment products.'"
It continues, "They write, 'MMFs also lowered their exposure to U.S. Treasury securities and increased their repurchase agreement (repo) allocation to over $2.8 trillion.... The change primarily reflected high repo rates and a net decrease in U.S. Treasury issuance. The U.S. Department of the Treasury is conserving its borrowing authority until the federal debt limit is raised or suspended.'"
We write in our "Fed, EU Focus article, "After a period of silence, bank regulators appear to be focusing once more upon money market funds and other non-bank players in the financial markets. Federal Reserve Bank of Dallas President Lorie Logan recently hosted a panel on 'The Increasing Role of Nonbank Institutions in the Treasury and Money Markets' at the Federal Reserve Bank of Atlanta 2025 Financial Markets Conference. The panel featured Lou Crandall of Wrightson ICAP, Deirdre Dunn of Citigroup Global Markets and chair of the Treasury Borrowing Advisory Committee, and Nate Wuerffel of BNY."
It states, "Logan comments, 'Our topic this afternoon is a timely one: the role of nonbank financial institutions (NBFIs) in Treasury and money markets.... The Treasury market and money markets sit at the very core of the financial system. The Treasury market finances the U.S. government, provides a safe and liquid asset relied on by investors worldwide, and creates a benchmark for broader long-term interest rates. Money markets establish overnight risk-free interest rates that are building blocks for all other asset prices, they keep credit flowing through the economy by financing a wide range of assets, and they are where the Fed implements the stance of monetary policy. And these markets are tightly linked because one of the main money markets is the repo market, where Treasury securities are financed.'"
Our "LGIP" piece says, "Fitch Ratings published 'U.S. Local Government Investment Pools Monitor: 1Q25,' which states, 'Fitch Ratings' two local government investment pool (LGIP) indices reported an aggregate asset increase in the first quarter of 2025 (1Q25) driven by Liquidity LGIPs, consistent with seasonal flow trends. Total assets for the Fitch Liquidity LGIP Index and the Fitch Short-Term LGIP Index reached $655.5 billion at quarter end, marking increases of $9.3 billion qoq and $40.5 billion yoy.' (Fitch's tables shows the Liquidity LGIP total at just $430.7 billion and the Short-Term LGIP total at $224.8 billion.)"
The article continues, "It says, 'The Fitch Liquidity LGIP Index rose by 2.3% qoq while the Fitch Short-Term LGIP Index fell by 0.2% qoq. These changes contrast with an average increase of 6.2% and average decrease of 1.8%, respectively, during the first quarter over the past three years.'"
MFI also includes the News brief, "Assets Hit Record $7.4 Trillion." It states, "Our MFI Daily asset series hit a record $7.406 trillion on June 3 (then dipped 6/4). Our MFI XLS monthly series hit a record $7.408 trillion in May. ICI's smaller weekly series shows assets retaking $7.0 trillion in the latest week." (See today's Link of the Day.)
Another News brief, "SEC Webinar Cites Money Funds," says, "Former Director of the SEC's Division of Investment Management Joel Goldberg cited money funds' survival from regulatory extinction in the early 1970's as the most important development in fund regulations. Barry Barbash also reviewed money funds' troubles during the Great Financial Crisis, and the webinar discussed tokenized MMFs."
A third News brief titled, "Portfolio Holdings: FICC Repo Hits $1T, T-Bills Drop," tells us, "Our May Money Fund Portfolio Holdings, with data as of April 30, 2025, show that holdings of Repo jumped last month while Treasuries declined. Repo, now the largest segment, increased $31.4 billion in April. Treasuries, now the second largest portfolio composition segment, decreased by $168.3 billion. Agencies were the third largest segment, CP remained fourth, ahead of CDs, Other/Time Deposits and VRDNs."
A sidebar, "Stradley Reviews MMF Regs," says, "Stradley Ronon Partner Jamie Gershkow and Associate Geena Marzouca recently published, 'Are We Trying to Kill Institutional Prime Funds? -- Money Market Funds in a Post Reform Era.' It explains, 'At a meeting of the US Securities and Exchange Commission (SEC) adopting significant reforms to money market fund regulation, Commissioner Peirce posed a pointed question: Are we trying to kill institutional prime funds? [T]his article looks at whether Commissioner Peirce’s concern became reality and assesses the overall impact of the reforms on the money market fund industry. [It] reviews considerations related to the implementation of certain aspects of the reforms, including liquidity fees, share cancellation, increased liquidity requirements and stress testing, and board oversight of money funds under amended Rule 2a-7 of the Investment Company Act of 1940 (1940 Act).'"
Our June MFI XLS, with May 31 data, shows total assets jumped $90.3 billion to a record high $7.408 trillion, after decreasing $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, $89.9 billion in October, $155.2 billion in September, $105.6 billion in August, $19.7 billion in July and $11.8 billion last June.
Our broad Crane Money Fund Average 7-Day Yield was down 1 bp to 4.01%, and our Crane 100 Money Fund Index (the 100 largest taxable funds) was down 2 bps to 4.11% in May. On a Gross Yield Basis (7-Day) (before expenses are taken out), the Crane MFA and the Crane 100 averaged 4.38% and 4.38%. Charged Expenses averaged 0.37% and 0.27% for the Crane MFA and the Crane 100. (We'll revise expenses once we upload the SEC's Form N-MFP data for 5/31/25 on Monday, 6/9.) The average WAM (weighted average maturity) for the Crane MFA was 37 days (up 3 days) and the Crane 100 WAM was up 5 days from the previous month at 39 days. (See our Crane Index or craneindexes.xlsx history file for more on our averages.)
Moody's Ratings just published, "Tokenized short-term funds could boost institutional adoption of digital assets," which tells us, "Tokenized money market funds (MMFs) and similar short-term, cash-like bond funds (collectively, tokenized short-term liquidity funds), are emerging as a critical component of the financial system that can serve as a bridge between traditional finance (TradFi) and decentralized finance (DeFi). These tokenized funds, a foundational asset management product, allow traditional institutional investors to move funds into digital financial products and allow digital finance investors to efficiently move money into traditional channels."
They explain, "In tokenized money market funds, fund shares are converted into digital tokens using blockchain technology. This gives traditional investors direct, non-intermediated access to digital finance markets through products backed by familiar and safe assets. Digital finance investors, meanwhile, can use tokenized money market funds to optimize their liquidity in a format that is easy to use and, unlike most stablecoins, allows them to earn a yield."
Moody's writes, "Demand from both digital finance and traditional markets could accelerate institutional adoption of digital assets and help asset managers increase their fee revenue and market share. However, although these short-term liquidity funds are low-risk assets that serve as a base liquidity management tool for brokerages and asset managers, they are not riskless. In addition to risks borne by all MMFs and similar short-term funds, such as credit, interest rate and liquidity risk, tokenized short-term liquidity funds have additional risks that stem from the novel technology."
The paper states, "Tokenized money market funds and similar short-term, cash-like bond funds (collectively, tokenized short-term liquidity funds) are a relatively new and fast growing product that can serve as a foundational liquidity management tool bridging both traditional finance and digital finance. These funds in essence operate like a traditional highly safe and liquid money market fund whose share registry uses a blockchain ledger to enable more transparency, flexibility and functionality. Often designed as US Treasury-backed money market funds, these vehicles are widely considered safe liquidity management assets that can serve as collateral. They also provide yield and can be a more efficient liquidity management vehicle than non-yield-bearing alternatives such as many stablecoins. The first tokenized short-term fund was launched in 2021 and these funds now total $5.7 billion in assets."
It tells us, "Unlike tokenized bank deposits, which remain liabilities of individual banks, tokenized short-term liquidity funds can offer the safety of holding a dollar's worth of US Treasury assets for each dollar of Net Asset Value (NAV). For digital investors, tokenized money market funds can also be used as yield-bearing collateral, unlike stablecoins, which mostly do not offer interest. A helpful analogy would be to think of stablecoins as digital cash, or a checking account, and tokenized money market funds as a savings account. In this sense, they can also be complementary as many tokenized money market funds use stablecoins to facilitate the instant redemption of funds."
Moody's adds, "Asset managers may see value in tokenized short-term liquidity funds as a gateway vehicle to offer clients who wish to effect transactions between digital assets and traditional finance. For many investors, moving funds from fiat currency to cryptocurrency is cumbersome. This is particularly true for investors whose holdings are subject to regulatory requirements, such as banks and insurance companies. For these investors, tokenized short-term liquidity funds, including tokenized money market funds, could provide a solution."
They state, "Tokenized short-term liquidity funds' use of blockchain technology can also offer potential operational efficiencies, cost savings and new functionalities not possible through traditional money market funds. For example, settlement on the blockchain can be much faster and simpler than would be the case for a traditional money market fund. Features such as know-your-customer (KYC) and anti-money-laundering screening could potentially be built into the management of the blockchain registry, offering compliance and regulatory benefits. On-chain record-keeping of shares and potentially other information could provide more transparency for shareholders and investors and improve risk management and operations. Potential use of smart contract features could also automate settlement processes and share transfer processes in a way that is not possible in traditional fund operations."
Finally, they write, "Although tokenization does not change the core credit risks of a money market fund or short-term bond fund -- risks such as price and liquidity risk in a sudden, severe market downturn, for example, are common to all such funds, whether or not they have a 'wrapper' of blockchain technology -- tokenization can introduce novel risks, and in particular operational risks arising from blockchain use. Such risks include, but are not limited to, network availability, scalability limitations and security vulnerabilities. An assessment of credit and sponsor quality serve as a foundation for analysis."
In other news, the latest "FDIC Quarterly Banking Profile Q1'25" says, "The Federal Deposit Insurance Corporation released its latest "FDIC Quarterly Banking Profile," which says "Domestic deposits rose for the third straight quarter and were up $180.9 billion (1 percent) from fourth quarter 2024. Savings deposits increased from the prior quarter, but declines in small time deposits partially offset the increase. Brokered deposits decreased for the fifth consecutive quarter and were down $14.9 billion (1.2 percent) from the prior quarter. Estimated insured deposits increased this quarter (up $110.5 billion, or 1 percent)."
It explains, "Community banks reported an increase in domestic deposits of 1.6 percent ($36.7 billion) during first quarter 2025. More than two-thirds of community banks (69.4 percent) reported an increase in deposit balances from the previous quarter. Community banks reported growth in estimated insured deposits (up $30.0 billion, or 1.9 percent) and in estimated uninsured domestic deposits (up $7.2 billion, or 1.0 percent). Quarterly growth in interest-bearing deposits (up $34.1 billion, or 1.9 percent) continued to surpass growth in noninterest-bearing deposits (up $2.7 billion, or 0.5 percent). Domestic deposits increased 5.2 percent ($116.8 billion) from one year earlier."
A separate press release, entitled, "FDIC-Insured Institutions Reported Return on Assets of 1.16 Percent and Net Income of $70.6 Billion in the First Quarter," comments, "Quarterly net income for the 4,022 community banks insured by the FDIC totaled $6.8 billion in the first quarter, an increase of $621.0 million (10 percent) from fourth quarter 2024. The community bank pretax ROA increased 11 basis points from last quarter to 1.18 percent. Higher net interest income (up $315.7 million, or 1.4 percent) and lower losses on the sale of securities (up $313.7 million, 54.8 percent) along with lower provision expenses (down $249.7 million, or 19 percent) and noninterest expenses (down $423.2 million, or 2.3 percent) more than offset lower noninterest income (down $476.6 million, or 9.1 percent)."
Crane Data published its latest Weekly Money Fund Portfolio Holdings statistics Wednesday, which track a shifting subset of our monthly Portfolio Holdings collection. The most recent cut (with data as of May 30) includes Holdings information from 47 money funds (down 22 from a week ago), or $2.913 trillion (down from $3.904 trillion) of the $7.400 trillion in total money fund assets (or 39.4%) 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 May 12 News, "May Money Fund Portfolio Holdings: FICC Repo Hits $1T, T-Bills Drop.")
Our latest Weekly MFPH Composition summary shows Government assets dominating the holdings list with Treasuries totaling $1.316 trillion (down from $1.728 trillion a week ago), or 45.2%; Repurchase Agreements (Repo) totaling $1.076 trillion (down from $1.411 trillion a week ago), or 36.9%, and Govern-ment Agency securities totaling $275.3 billion (down from $334.9 billion), or 9.4%. Commercial Paper (CP) totaled $116.1 billion (down from a week ago at $182.7 billion), or 4.0%. Certificates of Deposit (CDs) totaled $51.5 billion (down from $95.9 billion a week ago), or 1.8%. The Other category accounted for $44.6 billion or 1.5%, while VRDNs accounted for $33.8 billion, or 1.2%.
The Ten Largest Issuers in our Weekly Holdings product include: the US Treasury with $1.316 trillion (45.2% of total holdings), Fixed Income Clearing Corp with $321.1B (11.0%), the Federal Home Loan Bank with $178.7 billion (6.1%), JP Morgan with $100.4B (3.4%), RBC with $75.0B (2.6%), BNP Paribas with $70.2B (2.4%), Citi with $66.6B (2.3%), Federal Farm Credit Bank with $65.5B (2.2%), the Federal Reserve Bank of New York with $60.9B (2.1%) and Bank of America with $41.2B (1.4%).
The Ten Largest Funds tracked in our latest Weekly include: JPMorgan US Govt MM ($281.7B), JPMorgan 100% US Treas MMkt ($255.1B), Goldman Sachs FS Govt ($249.1B), Fidelity Inv MM: Govt Port ($232.4B), Morgan Stanley Inst Liq Govt ($166.4B), State Street Inst US Govt ($156.0B), Fidelity Inv MM: MM Port ($152.6B), Dreyfus Govt Cash Mgmt ($123.9B), Allspring Govt MM ($117.2B) and First American Govt Oblg ($108.6B). (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 BIS, or Bank for International Settlements, published a paper titled, "Stablecoins and safe asset prices." The Abstract says, "This paper examines the impact of dollar-backed stablecoin flows on short term US Treasury yields using daily data from 2021 to 2025. Estimates from instrumented local projection regressions suggest that a 2-standard deviation inflow into stablecoins lowers 3-month Treasury yields by 2-2.5 basis points within 10 days, with limited to no spillover effects on longer tenors. We also find evidence of asymmetric effects: stablecoin outflows raise yields by two to three times as much as inflows lower them. Decomposing the yield impact by issuer shows that USDT (Tether) has the largest contribution followed by USDC (Circle), consistent with their relative size. Our results highlight stablecoins' growing footprint in safe asset markets, with implications for monetary policy transmission, stablecoin reserve transparency, and financial stability."
The BIS writes, "Dollar-backed stablecoins have seen remarkable growth and are poised to reshape financial markets. As of March 2025, the combined assets under management of these cryptocurrencies promising par convertibility to the US dollar and backed by dollar-denominated assets exceeded $200 billion, surpassing the short-term US securities holdings of major foreign investors like China.... Stablecoin issuers, notably Tether (USDT) and Circle (USDC), back their tokens primarily with US Treasury bills (T-bills) and money market instruments, positioning them as significant players in short term debt markets. Indeed, dollar-backed stablecoins purchased nearly $40B of US T-bills in 2024, similar to the largest US government money market funds and larger than most foreign purchases.... While prior research focuses on stablecoins' role in cryptocurrency volatility (Griffin and Shams, 2020), their impact on commercial paper markets (Barthelemy et al., 2023) or their systemic risks (Bullmann et al., 2019), their interaction with traditional safe asset markets remains underexplored."
They explain, "This paper investigates whether stablecoin flows exert measurable demand pressures on US Treasury yields. We document two key findings. First, stablecoin flows compress short-term T-bill yields, with effects comparable to that of small-scale quantitative easing on long-term yields. In our most stringent specification, which aims to overcome endogeneity concerns by using a series of crypto shocks that affect stablecoin flows but not Treasury yields directly, we find that 5-day stablecoin inflows of $3.5B, or 2 standard deviations, lower 3-month T-bill yields by about 2-2.5 basis points (bps) within 10 days. Second, we decompose yield impacts into issuer-specific contributions to find that USDT has the largest contribution to T-bill yield compression, followed by USDC. We discuss the policy implications of our findings for monetary policy transmission, stablecoin reserve transparency, and financial stability."
The piece continues, "Our empirical analysis is based on daily data from January 2021 to March 2025. To construct a measure of stablecoin flows, we collect market capitalization data for the six largest dollar-backed stablecoins and aggregate them into a single number. We then use 5-day changes in aggregate stablecoin market capitalization as our proxy for inflows into stablecoins. We collect data on the US Treasury yield curve, as well as data on cryptocurrency prices (Bitcoin and Ether). We choose the 3-month Treasury bill yield as our outcome variable of interest as the largest stablecoins have either disclosed or publicly stated this tenor as their preferred habitat."
It concludes, "Stablecoins have already established themselves as significant players in Treasury markets, with measurable and significant effects on short-term yields. Their growth blurs the lines between cryptocurrency and traditional finance, demanding regulatory attention to reserve practices, potential implication for monetary policy transmission and financial stability risks. Future research could explore cross-border spillovers and interactions with money market funds, particularly during liquidity crises."
Another piece, "Stablecoins And The Banking System: Opportunity Or Threat?" tells us, "[C]rypto currencies may dominate the financial news today, but it is stablecoins that are subtly on track to transform banking. Stablecoins are simply the digital version of the cash in your wallet. Like cash, they don't earn interest, and they are pegged one-to-one to a currency, like a dollar. They have major advantages -- efficiency, accessibility, transparency, and security -- and can be exchanged back into your currency."
It states, "[M]ost people would be surprised to learn how indispensable stablecoins have become: The total value of stablecoins linked to the dollar has grown to $221 billion, with the average supply of stablecoins overall growing 28% per year. Tether, the world's largest stablecoin issuer, reported a net profit of $13 billion last year with just 80 employees. On their own, stablecoins would already be a top 20 U.S. bank." See also Bloomberg's "Stablecoin Regulation Could Shakeup US Financial System."
Money fund yields (7-day, annualized, simple, net) increased by two basis points to 4.12% on average during the week ended Friday, May 30 (as measured by our Crane 100 Money Fund Index), after declining by one basis point the previous week. Fund yields should stay relatively flat until the Fed moves rates again later this year. They've declined by 94 bps since the Fed first cut its Fed funds target rate by 50 bps on Sept. 18, 2024, and they've declined by 51 bps since the Fed last cut rates by 1/4 point on 11/7/24. Yields were 4.13% on 4/30/25, 4.14% on 3/31/25, 4.16% on 2/28/25, 4.19% on 1/31/25, 4.28% on average on 12/31/24, 4.45% on 11/30/24, 4.65% on 10/31, 4.75% on 9/30, 5.10% on 8/31, 5.13% on 7/31 and 6/28, 5.14% on 3/31 and 5.20% on 12/31/23. (Note: Register ASAP for our upcoming Crane's Money Fund Symposium, which is in just 3 weeks -- June 23-25 -- in Boston!)
The broader Crane Money Fund Average, which includes all taxable funds tracked by Crane Data (currently 682), shows a 7-day yield of 4.02%, up 1 bp in the week through Friday. Prime Inst money fund yields were up 1 bp at 4.25% in the latest week. Government Inst MFs were up 1 bp at 4.12%. Treasury Inst MFs were up 1 bp at 4.07%. Treasury Retail MFs currently yield 3.83%, Government Retail MFs yield 3.82%, and Prime Retail MFs yield 4.01%, Tax-exempt MF 7-day yields were down 38 bps to 2.13%.
Assets of money market funds rose by $85.7 billion last week to a record $7.400 trillion, according to Crane Data's Money Fund Intelligence Daily. This is the first record for MMF assets since the previous high of $7.383 trillion set on April 3. For the month of May (MTD), MMF assets have increased by $100.9 billion, after 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, $97.5 billion in October and $149.8 billion in September. Weighted average maturities were at 37 days for the Crane MFA and 39 days the Crane 100 Money Fund Index.
According to Monday's Money Fund Intelligence Daily, with data as of Friday (5/30), 115 money funds (out of 794 total) yield under 3.0% with $147.6 billion in assets, or 2.0%; 249 funds yield between 3.00% and 3.99% ($1.306 trillion, or 17.7%), 430 funds yield between 4.0% and 4.99% ($5.946 trillion, or 80.4%) 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 0.40%, after falling 1 bp two weeks prior. The latest Brokerage Sweep Intelligence, with data as of May 30, 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, Federated Hermes' MM CIO Deborah Cunningham writes, "The answer is, 'No'." She explains, "The question: Has Moody's downgrade of the US credit rating impacted money market funds? This is one of those instances when it is best to be direct. As soon as the news hit about Moody's recent downgrade of the US credit rating, we knew cash managers would be fielding questions about its impact on US money market funds. There are no ramifications: The rating agency has affirmed its Aaa-mf assessment of money funds is unaffected by the 'demotion.'"
The piece explains, "It's been some time since the other two major agencies lowered their US ratings -- the S&P in 2011 and Fitch in 2023 -- but it was almost instantly old news in our minds. The downgrades reflect the agencies' views on the federal government's inability to reduce its mammoth debt. By its nature, that is a long-term problem, meaning applicable to US Treasury bonds and notes. Bills, which have shorter maturities, are not subject to the same concern. And, among the three, most money market funds predominately or exclusively own bills."
It comments, "So, why doesn't a US downgrade impact a money fund rating? Well, it's all about time and methodology. Like the others, Moody's framework takes a holistic view of a fund, incorporating not only a credit assessment but also maturity and liquidity metrics, among other aspects. Although the downgrade may affect the credit-quality measure, the short-term nature of money fund holdings due to the maturity restrictions of Rule 2a-7 likely kept this impact modest. At the same time, the very high liquidity positions of these products remain robust, augmenting the overall stability profile of portfolios."
Cunningham says, "Critically, money fund risk management measures go several steps beyond simply choosing Treasury bills over notes and bonds. Generally speaking, the weighted average maturity of a fund's entire portfolio must be 60 days or less, it must hold a large amount of securities redeemable daily or weekly, and any asset it holds other than T-bills (such as Fannie Mae securities or commercial paper) must also be highly rated. In other words, Moody's and the like have not changed their opinion about the soundness of these financial products that operate in the short range of high-quality securities and that seek stability and preservation of capital. We think investors reach the same conclusion."
Finally, she adds, "President Trump has tested the bulwark protecting the Federal Reserve from political interference and found it as sturdy as ever. His insults of Chair Powell are one thing, but claiming he had the authority to fire him is another. That stance threatened the Fed's independent stature and was serious enough to earn a slapdown by the bond market. No one bullies like bondholders.... Thankfully, the Supreme Court stepped in. While it affirmed that the White House could dismiss the directors in question, it proactively shut the door on any similar attempt with the central bank: 'The Federal Reserve is a uniquely structured, quasi-private entity that follows in the distinct historical tradition of the First and Second Banks of the United States.'"
Dreyfus posted a brief titled, "Moody's Downgrade of US Long-Term Ratings," which states, "On May 16, Moody's Corporation downgraded the United States of America's long-term issuer and senior unsecured ratings to Aa1 from Aaa. Moody's released a statement on the downgrade, noting 'This one-notch downgrade on our 21-notch rating scale reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.'" (Note: Register ASAP for our upcoming Crane's Money Fund Symposium, which is in just 3 weeks -- June 23-25 -- in Boston!)
The Dreyfus piece continues, "With the downgrade, Moody's adjusted its outlook to 'stable.' 'The US economy is unique among the sovereigns we rate. It combines very large scale, high average incomes, strong growth potential and a track-record of innovation that supports productivity and GDP growth. While GDP growth is likely to slow in the short term as the economy adjusts to higher tariffs, we do not expect that the US' long-term growth will be significantly affected.'"
It says, "Moody's cut the US long-term issuer senior unsecured rating one level from Aaa to Aa1. There was no change to the short-term rating. All three rating agencies maintain the highest short-term rating at P-1 (Moody's), A-1+ (S&P) and F1+ (Fitch); This downgrade was roughly 18 months in the making, as Moody's lowered the US outlook from 'stable' to 'negative' in November 2023; Moody's was the last of the three major credit rating agencies to downgrade the US from its highest level. Fitch and S&P downgraded the US in 2023 and 2011, respectively."
Dreyfus comments, "Currently, all of the agencies' ratings are aligned at Aa1/AA+/AA+ with 'stable' outlooks; It is expected that certain issuers' ratings will follow the downgrade shortly, including direct rating impacts on US government-sponsored enterprises and agencies (who have direct credit linkages), and indirect impact on some US banks and insurers, infrastructure issuers, and state and local governments."
They add, "We do not expect any impact on Dreyfus Aaa/AAA money market fund (MMF) ratings as a result of the downgrade. We expect limited market reaction similar to the anticipated Fitch downgrade in 2023 as opposed to the S&P surprise action in 2011. We do not expect to see any MMF outflows on the back of the downgrade. We do not believe this will have any impact on MMF investments as it relates to changing haircuts in their respective collateral schedules. We believe Dreyfus is well positioned to meet our clients' investment needs with the depth and breadth of experience we bring to this asset class."
For more, see these Crane Data News stories: "Wells Fargo on Govt Debt Downgrade" (5/23/25); "Federated writes 'S&P Downgrade Immaterial to Money Market Funds" (8/9/11); "Standard Poor's Says AAAm Money Funds Unaffected by US Downgrade" (8/9/11); and, "ICI on S&P Downgrade, Reviews Flows During Debt Ceiling Debate" (8/8/11).
In other news, J.P. Morgan writes in a "JPM Mid-Week US Short Duration Update" that, "April showers low-duration bond funds with inflows." They state, "Low-duration bond funds posted another solid month of inflows in April, pulling in $13bn and bringing total AUMs across the funds we track to $868bn. This marks the fourth straight month of net inflows, with year-to-date totals reaching $43bn, a roughly 5% increase since the start of the year."
The update tells us, "Most strategies across the low-duration space saw inflows during the month, but short-term government funds stood out. These funds took in $3.6bn in April alone, accounting for 58% of their YTD inflows. So far in 2025, short-term government funds have garnered $6.2bn, already surpassing full year inflows in comparison to any of the past six years outside of 2020."
JPM continues, "Performance likely contributed to the increased flows into low-duration funds in April. In fact, during the month, the 2-year Treasury yield fell by 29bp, ending at 3.62%, which pushed the 1m/2y curve to -62bp, compared to -33bp on March 31, as markets aggressively repriced in anticipation of additional policy rate cuts throughout the year.... Notably, short-term government strategies with effective durations of 1.5-3.5 years generally outperformed comparable strategies, including other short-term funds, ultra-short funds, and MMFs. This outperformance is particularly evident over the 1 month and 3-month periods."
They state, "On the positioning side, the trend toward Treasury securities has also moved higher so far this year. Based on our estimates, low-duration funds have increased their Treasury holdings by $11bn YTD, bringing total exposure to $214bn as of April month-end.... Allocations to ABS also rose by $10bn over the same period. Additionally, low duration funds continued to maintain around $35bn in CP/CD holdings, with a modest $1bn increase year to date."
Finally, the article adds, "While the macro backdrop remains uncertain, with concerns ranging from fiscal dynamics to policy expectations and trade tensions, we expect low-duration funds to continue attracting steady inflows through the year. Should inflows across these funds persist, especially if short-term and ultra-short government funds maintain their momentum, this could also add incremental demand for front-end Treasuries on the margin."
