US money market fund assets rose to their highest level since late 2009, as investors poured more cash into these low-risk accounts even while major Wall Street indexes reached record peaks on hopes for rate cuts from the Federal Reserve, a private report released on Wednesday showed. Total money fund assets jumped $41.12 billion to $3.234 trillion in the week ended July 9, a level not seen since December 22, 2009, the Money Fund Report said on Wednesday.
Total fund assets have grown for 11 consecutive weeks, increasing by about $224 billion during the current stretch. For some cautious investors, earning about a 2% yield with almost no risk has been more compelling than buying more junk bonds and stocks, which have produced the double-digit total returns in the first half of 2019.
The average yield on taxable money funds is comparable to the yields on benchmark 10-year Treasury notes. A softening global economy and trade conflicts have stoked the inflows into money funds, analysts said. "It's the fear. It's a conservative way to deal with risks out there," said Jim Paulsen, chief investment strategist at The Leuthold Group in Minneapolis.
Taxable money market fund assets increased by $39.58 billion to $3.095 trillion, the highest level since August 11, 2009, according to the report, published by iMoneyNet. ax-free money fund assets rose by $1.54 billion to $139.40 billion. The iMoneyNet average seven-day simple yield for taxable money funds rose to 2.02% from 2.00% the week before. The weighted average maturity among taxable funds was unchanged at 29 days.
The iMoneyNet average seven-day yield for tax-free and municipal funds dropped to 1.15% from 1.43%, which was its highest since early May. The weighted average maturity of tax-free funds shortened by one day to 28 days.