NEW YORK (Reuters) - U.S. money market fund assets rose in the latest week, the first gains since the week ended September 24, as investors shifted money back into assets following a deal to extend the U.S. debt ceiling deadline, a report released on Wednesday showed.
Money market assets increased by $34.64 billion to $2.640 trillion in the week ended October 22, according to the Money Fund Report published by iMoneyNet.
“We recouped about half of what was taken out,” said Mike Krasner, managing editor at iMoneynet, noting that total assets were down about $62.70 billion in the three weeks prior to the latest period. “It’s been flowing back every day since October 16.”
U.S. money market fund assets recorded their largest one-week decline in nearly a year in the week ended October 15, falling $44.77 billion to $2.606 trillion.
The legislation to raise the debt ceiling was signed by President Barack Obama just before the U.S. government was expected to exhaust its statutory $16.7 trillion borrowing limit Thursday, pulling the world’s biggest economy back from the brink of a historic default.
Worries about a default had led large money fund operators to shed holdings of Treasury bill issues that mature in late-October to mid-November, the issues that were considered the most vulnerable if the government were to delay its debt payments.
The iMoneyNet report also said that in the week ended October 22 taxable money market fund assets increased by $35.90 billion to $2.377 trillion, while tax-free assets decreased by $1.26 billion to $263.66 billion.
The iMoneyNet Money Fund Average 7-Day Simple Yield for All Taxable money-market funds held steady at 0.01 percent. The iMoneyNet Money Fund Average 7-Day Simple Yield for All Tax-Free and Municipal money-market funds was also unchanged at 0.01 percent.
Reporting by Caroline Valetkevitch; Editing by Leslie Adler