Money Market News
J.P. Morgan published a new "Stablecoin market update," which explains, "It has been a year of turmoil in the crypto industry, marked by the collapses of several entities including FTX, Three Arrows Capital, BlockFi, Celsium, Genesis, and others. Even before then, confidence in cryptocurrency, including stablecoins, was weakening given the run on TerraUSD in early 2022. It's no surprise, then, that the stablecoin market has shrunk, along with the broader cryptocurrency market. According to CoinGecko, the size of the stablecoin market has fallen from a peak of ~$180bn in May 2022 to ~$120bn today."
A press release entitled, "Dreyfus Launches SPARK Shares of Dreyfus Government Cash Management Available Exclusively through BNY Mellon," tells us, "Dreyfus, one of the largest, trusted cash and liquidity managers, announced today the launch of SPARK shares (SPKXX). The share class allows clients to drive change with their liquidity investments by directing a donation to an eligible non-profit organization of their choice. The donation is expected to result in a positive, quantifiable impact for the selected organization." (Note: Thanks again to those who attended our European Money Fund Symposium in Edinburgh this week! Mark your calendars for next year's show, Sept. 19-20, 2024 in London!)
A new publication called "Income Matters Today," written by former Barron's columnist Lawrence Strauss recently interviewed our Peter Crane in a piece entitled, "Juicy Yields: An industry expert weighs in on money market funds."It explains, "For many years, as interest rates were very depressed thanks in no small part to the Federal Reserve's quantitative easing program, money market mutual funds had puny yields. But that's reversed. To fight inflation, the Federal Open Market Committee has aggressively raised short-term rates since early last year, effectively boosting yields across the bond market. Money market funds have been a big beneficiary. Assets total about $6 trillion, an all-time record. For some perspective on these funds, which typically invest in shorter-term securities such as Treasury bills, Income Matters Today spoke with Peter Crane, a leading expert on these funds. This is an edited version of that conversation." (Note: Thanks to those who attended and supported our European Money Fund Symposium in Edinburgh this week! Watch for highlights of the show in coming days and in our next Money Fund Intelligence!)
The Investment Company Institute published, "Worldwide Regulated Open-Fund Assets and Flows, Second Quarter 2023," last week, which shows that money fund assets globally jumped by $257.9 billion, or 2.7%, in Q2'23 to $9.719 trillion. The increases were led by a sharp jump in money funds in U.S., while India, France, Mexico and Luxembourg also rose. Meanwhile, money funds in China and Ireland were lower. MMF assets worldwide increased by $1.237 trillion, or 14.6%, in the 12 months through 6/30/23, and money funds in the U.S. now represent 56.1% of worldwide assets. We review the latest Worldwide MMF totals, below. (Note: Thanks to those attending and supporting our European Money Fund Symposium, which takes place Sept. 25-26, 2023 in Edinburgh. Welcome to Scotland!)
Bloomberg published the article, "The Higher-for-Longer Interest-Rate Bonanza," which is subtitled, "With yields passing 5%, money-market funds rake in cash while banks fail to keep pace." They tell us, "With the US Federal Reserve keeping interest rates pinned around zero for most of the past 15 years, depositors grew resigned to earning virtually nothing on their cash, whether it was sitting in a bank or a money-market fund. A turning point came in the spring. Thanks to the Fed's inflation-fighting interest-rate hikes, people started to see they could earn 4% or more on their money. The regional bank crisis that began with the collapse of Silicon Valley Bank in March served as another wake-up call. 'If you maintain idle balances at a bank, that's an unsecured risk that you're not getting compensated for,' says Barclays Plc strategist Joseph Abate. 'People became more aware in March after SVB, which is when the deposit awakening kicked off.'"
State Street Global Advisors' latest "Monthly Cash Review - August 2023 (USD)" discusses, "Money Market Fund Reform 2023." Author Will Goldthwait writes, "The Securities Exchange Commission (SEC) recently proposed some changes to Rule 2a-7, the standard that governs money market mutual funds (MMFs). We consider some of the challenges of the new rule and what it could mean for the industry, fund providers and investors. (Note: We hope to see some of you next week at our European Money Fund Symposium, which will take place Sept. 25-26, 2023 in Edinburgh. The agenda features sessions on U.S. and European MMFs regulations. For those attending, safe travels and see you in Scotland!)
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 Sept 15) includes Holdings information from 71 money funds (up 17 from two weeks ago), or $2.989 trillion (up from $2.307 trillion) of the $5.998 trillion in total money fund assets (or 49.8%) 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.)
The FDIC's latest, "Quarterly Banking Profile Second Quarter 2023," tells us, "Total deposits declined $98.6 billion (0.5 percent) between first and second quarter 2023. This was the fifth consecutive quarter that the industry reported lower levels of total deposits. A reduction in estimated uninsured deposits (down $180.6 billion, or 2.5 percent) drove the quarterly decline. Estimated insured deposits continued to increase (up $84.9 billion, or 0.8 percent) during the quarter. The decline in total deposits in second quarter 2023 was nearly offset by increased wholesale funding (up $79.9 billion, or 1.5 percent) from the previous quarter. Wholesale funding as a percentage of total assets rose from 17.1 percent in the year ago quarter to 22.8 percent in second quarter 2023." (Note too: Last call for next week's European Money Fund Symposium, which will take place Sept. 25-26, 2023 in Edinburgh. For those attending, safe travels and see you in Scotland!)
Crane Data's latest Money Fund Intelligence International shows that assets in European or "offshore" money market mutual funds surged higher over the past 30 days to a record $1.103 trillion, as yields also continued higher. Assets for USD, EUR and GBP MMFs all rose over the past month. European MMF assets just recently broke above their previous record high of $1.101 trillion set in mid-December 2021. These U.S.-style money funds, domiciled in Ireland or Luxembourg and denominated in US Dollars, Pound Sterling and Euros, increased by $20.5 billion over the 30 days through 9/14. The totals are up $72.8 billion (7.1%) year-to-date. (Note that currency moves in the U.S. dollar cause Euro and Sterling totals to shift when they're translated back into totals in U.S. dollars. See our latest MFI International for more on the "offshore" money fund marketplace. These funds are only available to qualified, non-U.S. investors.) (Note too: Please join us next week for our European Money Fund Symposium, which will take place Sept. 25-26, 2023 in Edinburgh. For those attending, safe travels and see you in Scotland!)
The September issue of our Bond Fund Intelligence, which was sent to subscribers Friday morning, features the stories, "Rough Year for Short-Term Bond Flows Says MStar, JPM," which reviews how investors are moving out of shorter funds, and "T. Rowe Price: Ultra Short-Term Bond Fund vs. MMFs," which discusses "a strategic or long-term approach to cash investing." BFI also recaps the latest Bond Fund News and includes our Crane BFI Indexes, which show that bond fund returns fell in August while yields rose. 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.)
The Federal Reserve released its latest quarterly "Z.1 Financial Accounts of the United States" statistical survey (a.k.a. "Flow of Funds") late last week. Among the 4 tables it includes on money market mutual funds, the Second Quarter 2023 edition shows that Total MMF Assets increased by $224 billion to $5.917 trillion in Q2'23. The Household Sector, by far the largest investor segment with $3.526 trillion, saw the biggest asset increase in Q2, followed by Nonfinancial Corporate Businesses. The Fed's latest Z.1 numbers, which contain one of the few looks at money fund investor segments available, also showed noticeable increases for the Other Financial Business (formerly Funding Corps), the Rest of World and the Mutual Fund categories in Q2 2023. (Note: There's still time to register for our European Money Fund Symposium, which is Sept. 25-26, 2024 in Edinburgh. We hope to see you in Scotland!)
Crane Data's September Money Fund Portfolio Holdings, with data as of Aug. 31, 2023, show that Treasury holdings surged in August while Repo plunged. Money market securities held by Taxable U.S. money funds (tracked by Crane Data) increased by $106.7 billion to a record $5.919 trillion, after increasing $78.3 billion in July, $46.1 billion in June, $92.6 billion in May, $81.2 billion in April and $390.5 billion in March. Repo dropped but continues to lead as the largest portfolio segment, falling by nearly $100 billion. Treasuries jumped by over $160 billion but remained in the No. 2 spot. But the U.S. Treasury surpassed the Federal Reserve Bank of New York as the largest Issuer to MMFs, jumping to $1.586 trillion vs. the Fed RRP's $1.560 trillion (down $188.5 billion). Agencies were the third largest segment, CP remained fourth, ahead of CDs, Other/Time Deposits and VRDNs. Below, we review our latest Money Fund Portfolio Holdings statistics.
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