Investors continue to flock to money market funds in search of higher yields, posing an ongoing challenge to banks trying to keep deep-pocketed account holders.
continue to attract investors at a time when the Federal Reserve appears determined to keep rates elevated for some time.
About $14 billion poured into money-market funds in the week through August 30, according to data from the Investment Company Institute. Total assets reached $5.58 trillion, versus $5.56 trillion the previous week. It is the highest total since the data was first collected in 1992.This is not great news for banks that have been struggling to hold onto their depositors for the last year, especially since the failures of three sizable lenders in the spring.
Since the beginning of January deposits at all US banks have fallen by $371 billion, according to data from the Federal Reserve, while money market funds have risen by more than $769 billion. Those outflows slowed during the summer, but deposits are still down for bigger banks since the end of June. The greatest flight risk is still from the wealthy. Deposits from wealth management and corporate accounts have both fallen nearly 13% so far this year through July, according to data provider Curinos, although both stabilized during the month of July. August data is not yet available."Ironically, the most worrisome bank client is the very liquid high net worth client," Tim Coffey, a bank analyst with Janney Montgomery Scott, told Yahoo Finance.
In recent weeks, Moody’s Investor Service and S&P Global each downgraded credit ratings for a number of mid-sized lenders, meaning
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