Investors pulled about $6.5 billion out of money-market funds in the past week through Wednesday, according to data from the Investment Company Institute.
You could blame the long weekend, or just “a quirk of the calendar,” where institutional assets in money-market funds tend to drop around the 15th of each month.
But no. This isn’t the long-awaited exodus from bulging money-market funds that many on Wall Street have been anticipating, said Peter Crane, president and CEO of Crane Data.
“Rates would have to drop below 3% or lower,” Crane told MarketWatch on Thursday. And the Fed would need to be done cutting rates too, he said.
That’s because falling rates are actually short-term positive for money-market flows, according to Crane, because all of the things money-market funds compete with, including overnight repos, T-bills and CDs, tend to see their rates drop, while rates on money-market funds lag, he said.
November and December also tend to be the strongest months for money-market inflows, Crane said.
