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U.S. money funds' stake in U.S. Treasuries fall: J.P. Morgan

[December 13, 2014]  NEW YORK (Reuters) - U.S. prime money market funds' holdings in U.S. Treasuries decreased 13 percent to $54 billion at November to the lowest level in nearly two years due to tight Treasury bill supply and higher yields offered by competing debt, J.P. Morgan analysts said on Friday.

Prime money market funds invest in commercial paper, bank deposits and other private debt in addition to U.S. government securities.

Meanwhile, U.S. money funds' holdings of fixed-rate reverse repurchase agreements or reverse repos (RRP) offered by the Federal Reserve fell by $8 billion last month, the analysts said in a report released on Friday.

Fed has been testing reverse repos where it pays money funds, Wall Street dealers and mortgage finance agencies interest to borrow its Treasuries.

The central bank has said it would use this tool that drains cash from the bank system in a bid to achieve its interest rate target when it decides to tighten monetary policy.

(Reporting by Richard Leong; Editing by Chizu Nomiyama)

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