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Home Investing Strategy Fixed Income Analysis Summary Balances in money market funds held by households rose by $63 billion from the prior quarter, and year-over-year by $579 billion, or by 12.8%, to $5.1 trillion in Q2, according to the Fed’s quarterly Z1 Financial Accounts. Total MMF balances, including those held by households and institutional investors, rose by $152 billion in the quarter and year-over-year by $960 billion, or by 12.8%, to $8.4 trillion. Treasury bills bought at auction and held at brokers, where they can be set up on automatic rollover, are a close alternative to MMFs and similarly liquid.
On Monday, the government sold 6-month T-bills at the auction at an “investment rate” of 4.20% or a “high rate” of 4.06%. In the secondary market, the 6-month yield traded at 4.18%. In “real” terms (after inflation), MMF yields have been meager to negative as consumer price inflation has been running slightly below or slightly above MMF yields this year. utah778/iStock via Getty Images The interplay of risk and inflation.
Yields of money market funds, currently below 3.75% after fees, aren’t as attractive as they were in the first half of 2024 when their yields went over 5%. Nevertheless, households have further increased their 5.06K Followers
Source: Seeking Alpha
