US money market fund assets increased for a third straight week amid worries about slowing economic growth and renewed trade tension between China and the United States, a private report released on Wednesday showed. Investors preferred to put more cash into tax-free money funds in the latest week over taxable ones despite their lower yields, the Money Fund Report said on Wednesday.
Taxable money fund yields, meanwhile, are comparable to those on US Treasuries with less interest rate risks, analysts said. "It's not that expensive to hold cash right now as an opportunity or as a defense," said Cliff Corso, executive chairman of Insight Investment in New York. "Cash is not trash." The yield on two-year Treasury notes was 2.164% late on Wednesday. Total money fund assets increased $2.67 billion to $3.052 trillion in the week ended May 14, according to the report, published by iMoneyNet.
Taxable money market fund assets slipped by $833.60 million to $2.912 trillion, while tax-free assets increased by $3.50 billion to $139.93 billion. The iMoneyNet average seven-day simple yield for taxable money funds was 2.04%, the lowest in three months and down from 2.06% last week. The weighted average maturity among taxable funds was unchanged at 30 days.
The iMoneyNet average seven-day yield for tax-free and municipal dropped to 1.23%, the lowest in four weeks, from 1.59% the week before. The weighted average maturity of tax-free funds remained at 22 days.
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