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U.S.
government-only money fund assets rose by $42 billion in the
week ended Aug. 2 to $1.564 trillion, the Money Fund Report said
on Wednesday.
This was the biggest weekly rise in government money fund assets
since the week of June 28 when they saw $51.4 billion in
inflows, it said.
In contrast, prime money funds that could invest in riskier
debt, including commercial paper and certificate of deposits
issued by banks, lost about $27 billion in assets from a week
earlier to $970 billion, according to the report, published by
iMoneyNet.
On Oct. 14, the Securities and Exchange Commission will require
prime money funds used by institutional investors to float their
per-share net asset value or impose redemption gates and
liquidity fees on redemptions in times of market stress.
Some prime funds have changed over to government-only funds
which are exempt from these SEC rules.
This move has reduced demand for bank CPs and CDs from money
funds, analysts say, making it more expensive for banks to
borrow in money markets.
On Wednesday, the London interbank offered rate on three-month
dollars, a benchmark for more than $300 trillion of financial
products around the world, reached a fresh seven-year high at
0.77760 percent.
Since October 2015, prime fund assets had fallen by about $500
billion with most of the money going into government-only money
funds, according to UBS analysts.
In the latest week, overall U.S. money market fund assets
increased by $12.88 billion to $2.718 trillion.
Taxable money market fund assets increased by $14.64 billion to
$2.534 trillion, while tax-free assets decreased by $1.76
billion to $184.16 billion.
The average seven-day simple yield on taxable money-market funds
held at 0.11 percent, while the average 7-day simple yield on
tax-free and municipal money-market funds rose to 0.08 percent
from 0.07 percent the previous week.
(Reporting by Richard Leong; Editing by Jonathan Oatis)
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