September 18, 2019 / 6:07 PM / a month ago

U.S. money fund assets fall from Oct 2009 peak -iMoneyNet

NEW YORK (Reuters) - U.S. money market fund assets declined from their highest level since October 2009 as companies withdrew cash to pay for tax and investors needed money to settle bonds they bought, a private report released on Wednesday said.

Assets of money funds, which are seen as being nearly as safe as bank accounts, decreased $20.55 billion to $3.335 trillion in the week ended Sept. 17, the Money Fund Report said.

Heavy demand for cash earlier this week, analysts say, disrupted across money markets, sending some interest rates as high as 10% on Tuesday. It led the Federal Reserve to inject more than $100 billion in temporary cash into the banking system to calm those markets.

This reduced their year-to-date increase in fund assets to about $365 billion.

Investors had piled cash into money funds on concerns about U.S.-China trade tensions and a softening global economy.

Money funds have also been offering investors higher yields than some Treasury issues. That will likely change after the Federal Reserve, as expected, lowered key lending rates by a quarter point on Wednesday to 1.75%-2.00%.

Taxable money market fund assets fell by $19.45 billion to $3.201 trillion, while tax-free assets slipped by $1.10 billion to $133.97 billion, according to the report, published by iMoneyNet.

The iMoneyNet average seven-day simple yield for taxable money funds jumped to 1.87% from 1.75% the prior week. The weighted average maturity among taxable funds was lengthened by two days to 34 days.

The iMoneyNet average seven-day yield for tax-free and municipal funds edged up to 0.92% from 0.90%. The weighted average maturity of tax-free funds grew one day to 35 days.

(For a graphic on 'U.S. money fund assets' click tmsnrt.rs/2ElkcI2)

Reporting by Richard Leong; Editing by Nick Zieminski

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