Investors withdrew about $6.5 billion from money market funds in the week ending last Wednesday, according to data from the Investment Company Institute.
It could be a long weekend, or it could just be a “calendar anomaly'' in which institutional money market fund assets tend to drop around the 15th of each month.
But that's not the case. Peter Crane, president and CEO of Crane Data, said this is not the long-awaited exodus from bloated money market funds that many on Wall Street were expecting. said.
“Interest rates will need to fall below 3%,” Crane told MarketWatch on Thursday. And the Fed will also need to complete its rate cuts, he said.
That's because lower interest rates are good for money market flows in the short term, Crane said, because overnight repos, short-term securities, CDs and other money market funds compete with interest rates. This is because there is a tendency to decline. Interest rates on money market funds lag, he said.
Crane said November and December tend to be the busiest months for money flows into money markets.
