US money market fund assets reached their highest level in more than nine years as investors poured cash into low-risk investments following a flare-up in trade tension between China and the United States, a private report released on Wednesday showed.
US money market fund assets increased by $40.67 billion to $3.092 trillion in the week ended May 21, marking the highest amount since March 2010, the Money Fund Report said. The move was the biggest single-week increase since December. Earlier this month, Washington raised existing tariffs on $200 billion in Chinese goods to 25% from 10%, prompting Beijing to retaliate with its own duties on US imports, as talks to end a 10-month trade war between the world's two largest economies stalled.
The surprise deterioration in trade negotiation between China and the United States has rattled investor confidence, causing a rush out of stocks, junk bonds and other risky assets into Treasuries, gold and yen. Taxable money market fund assets increased by $41.32 billion to $2.953 trillion, while tax-free assets decreased by $657.20 million to $139.27 billion, according to the report, published by iMoneyNet.
The iMoneyNet average seven-day simple yield for taxable money funds held at three-month low at 2.04%. The weighted average maturity among taxable funds was held at 30 days.
The iMoneyNet average seven-day yield for tax-free and municipal funds tumbled to 0.99%, the lowest since late January and from prior week's 1.23%. The weighted average maturity of tax-free funds remained at 22 days.